U.K. Committee Links Unbacked Crypto Assets to Gambling
The House of Commons Committee in the United Kingdom released a report on May 17, stating that trading and investing in unbacked crypto assets resembles gambling.
The committee emphasizes the need to regulate crypto assets to stimulate innovation while mitigating risks effectively.
🚨 Published today 🚨
🪙 We’ve just published our report on cryptoassets, setting out our recommendations for the Government’s approach to regulating this market.
— Treasury Committee (@CommonsTreasury) May 16, 2023
The report argues that consumer speculation in assets like Bitcoin and Ether carries significant risks, and the government should adopt a different approach to protect consumers from potential harm. One key recommendation in the report is to classify unbacked crypto assets as akin to gambling.
The report suggests that since cryptocurrencies lack inherent value and their prices fluctuate widely, they should be regulated as gambling rather than financial services.
In the United Kingdom, gambling is regulated by the Gambling Commission under the Gambling Act 2005. This framework provides guidance and enforces measures to prevent problem gambling, including anti-money laundering and counter-terrorism financing. It covers various businesses such as bingo halls, lotteries, arcades, betting shops, online betting companies, and casinos.
Charles Randell, former chair of the Financial Conduct Authority (FCA), supports the idea that speculative crypto investments are a form of gambling and should be regulated and taxed accordingly. The FCA also highlights the rising issue of crypto gambling addiction and the limited controls in place to protect vulnerable consumers.
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Charles Randell, a former chairperson of the Financial Conduct Authority (FCA), shares the viewpoint that speculative investments in cryptocurrencies resemble gambling and should be subject to appropriate regulation and taxation. The FCA also raises concerns regarding the increasing addiction problem to crypto gambling and the limited safeguards in place to protect vulnerable individuals.
In line with establishing the UK as a leading global center for crypto assets, the government aims to provide clear legislative guidelines on cryptocurrencies within the next year. The objective is to implement consistent regulations for crypto assets and transactions, treating them uniformly. Prime Minister Rishi Sunak has emphasized this approach to solidify the UK’s position as a hub for crypto assets.
The cryptocurrency industry has experienced significant growth in the past decade, with the UK playing a prominent role. This can be attributed to the country’s well-established financial sector, which has fostered the development of the crypto industry. A report by the Financial Service Compensation Scheme (FSCS) reveals that 91% of adult consumers in the UK are familiar with cryptocurrencies.