On Wednesday, May 17, the UK Treasury Committee issued a report stating that cryptocurrencies should be regulated like ‘gambling’ due to their significant risks and potential use cases for fraudulent activities.
Notably, Harriett Baldwin MP, Chair of the Treasury Committee, stated that cryptocurrencies had “no intrinsic value, huge price volatility, and no discernible social good.” The MP also suggested that the “consumer trading of cryptocurrencies like Bitcoin more closely resembles gambling than a financial service, and should be regulated as such.”
In a statement shared with Finbold, CryptoUK, the first self-regulatory trade association for the UK crypto industry, firmly criticized the Treasury Committee’s stance on crypto regulation.
“CryptoUK strongly disagrees with the Treasury Committee’s conclusion, and we are both concerned and disappointed by these claims, which are unhelpful, false, fundamentally flawed, and unsubstantiated. The statement fails to reflect the true nature, purpose, and potential of the crypto industry.”
– said Ian Taylor, Board Advisor at CryptoUK.
Further in the statement, Taylor responded to MPs’ claims that regulators should treat crypto as gambling.
“Professional investment managers see Bitcoin and other cryptoassets as a new alternative investment class – not as a form of gambling – and institutional adoption of unbacked crypto assets has increased significantly.”
– Taylor added.
Consumer risks
Ultimately, CryptoUK acknowledged a certain consumer risk when it comes to crypto trading, arguing that such threats should be addressed “through education, awareness, and a more robust regulatory framework.” However, equating crypto trading with gambling is “unhelpful and untrue,” Taylor added.
Specifically, in the report, the cross-party committee of Parliament members said Bitcoin (BTC), Ethereum (ETH), and other cryptocurrencies are not backed by an underlying asset, resulting in substantial price volatility. In addition, the potential for major investment losses is significantly higher with those assets.
On the other hand, if retail crypto trading falls under financial service regulations – as proposed by the UK government – this could produce a “halo” effect and convince consumers that trading cryptocurrencies is safe, the report states.
Currently, roughly 10% of UK adults hold or have previously invested in cryptocurrencies, according to HM Revenue & Customs data.
To back its claims, the committee said the 2022 events in the crypto industry, such as the FTX collapse, have emphasized the risks posed to consumers by the crypto space, “large parts of which remain a wild west,” MPs wrote.