Due to the high levels of risk associated with Bitcoin, Ether and other cryptocurrencies, a group of UK legislators concluded on Wednesday that they should be regulated like gambling.
The UK Aims to be a Global Hub for Crypto
The UK is drafting its first laws for crypto assets, which presently only conform to anti-money laundering measures . This is one of the several steps planned to become a worldwide center for crypto and its underlying blockchain technology.
The report from parliament’s treasury committee said that Bitcoin and Ether, which make up two-thirds of all cryptoassets are not backed by any currency or asset which causes price volatility . The lawmakers warned that customers can be misled into thinking that trading and investing in unbacked cryptocurrencies is safer than it is due to the “halo” effect created by regulation .
Consistent with its stated premise of “same risk, same regulatory outcome” the report recommends that the government should treat crypto trading and investing activities in unbacked crypto assets as gambling rather than as a financial service .
The Crypto Industry Refused This Gambling Analogy
CryptoUK, an industry group, has voiced its strong opposition to the gambling analogy.
“We are worried and dismayed by these statements, which are useless, incorrect, faulty and lacking in evidence . The report fails to reflect the true nature, purpose and potential of the crypto industry.”
Financial Conduct Authority highlights that investors should be aware of the high risk of cryptocurrency investments.
10% of the Population Uses Cryptocurrency in the UK
The worldwide market capitalization of crypto assets is around $1.2 trillion which is a little fraction of the financial system. Yet the failure of the FTX exchange last year has increased the urgency of regulating the industry .
Treasury Committee Chair Harriett Baldwin warned that “the events of 2022 have highlighted the risks posed to consumers by the cryptoasset industry large parts of which remain a wild west .”
According to statistics around 10% of persons in the UK now possess or have previously held cryptocurrency .