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A parliament Treasury committee in the UK has said cryptocurrency trading should be regarded as a form of gambling rather than a financial service, whilst also demanding regulations for the industry.
The MPs concluded that like gambling, cryptocurrency can be addictive and that the government must avoid wasting taxpayers’ money to promote tech innovations such as digital tokens. The panel after its fresh inquiry added that the volatile price of unbacked assets such as Bitcoin could lead consumers to lose life-changing sums of cash
“Effective regulation is clearly needed to protect consumers from harm, as well as to support productive innovation in the UK’s financial services industry,” said Conservative MP and Treasury committee chair, Harriett Baldwin.
“However, with no intrinsic value, huge price volatility and no discernible social good, consumer trading of cryptocurrencies like bitcoin more closely resembles gambling than a financial service, and should be regulated as such.”
Though the committee came down hard upon the cryptocurrency sector, it showed faith in blockchain technology which could benefit the financial services industry whilst having other benefits.
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Do not treat it as financial service: MPs
While British media reports claimed that cryptocurrency trading would soon be brought under the Financial Conduct Authority – the committee was not too enthused by the prospect.
It said treating crypto trading or investing like financial service would create a ‘halo effect’ – meaning investors would be lulled into a false sense of security that the industry was “safer than it is” or that they were protected from financial losses, when they are not.
Binance bats for regulations
After Binance, the world’s largest cryptocurrency exchange halted Bitcoin withdrawals on the platform for a second time in under 12 hours, earlier this month, eyebrows were once again raised over cryptocurrency trading.
Binance cited congestion on the blockchain due to the high volume of pending transactions as the reason for hitting the pause button. According to data made available by CrpytoQuant, the congestion happened as the platform saw its highest-ever net daily withdrawal of Bitcoin – a net 175,646 tokens on May 7.
Even Binance Chief Executive Officer Changpeng Zhao has called for regulations in the industry to protect the investors.
“We’re in a new industry, we’ve seen in the past week, things go crazy in the industry. We do need some regulations, we do need to do this properly, we do need to do this in a stable way,” said Zhao while speaking at the G20 leaders’ summit in Bali last year.
“I think the industry collectively has a role to protect consumers, to protect everybody. So it’s not just regulators. Regulators have a role but it’s not 100% their responsibility,” he added.
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