Trading in bitcoin and other speculative cryptocurrencies should be regulated as gambling to avoid consumers from being lulled into a false sense of security about the risks posed by the $1.2 trillion market, MPs have warned.

The Treasury select committee has told ministers that there is a danger of creating a “halo” of credibility around unbacked cryptoassets if they are treated as part of financial services. The MPs also criticised a now-aborted idea at the Treasury for the Royal Mint to create a digital token.

Their intervention comes just months after the government set out its long-awaited plan to regulate activities in the crypto industry, which will fall to the Financial Conduct Authority under the current proposals.

Cryptocurrencies, which lie beyond the control of