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Crypto leaders in the UK have branded a government body’s calls for unbacked digital assets to be regulated in the same way as the gambling industry as ‘an appalling backwards step’.

The Treasury Committee report, released this morning, said that cryptocurrencies “such as Bitcoin have no intrinsic value and serve no useful social purpose, while consuming large amounts of energy and being used by criminals in scams, fraud and money laundering”.

The damning dossier, compiled by a cross-party committee of MPS also raised concerns that regulating consumer crypto trading as a financial service – as proposed by the Government – will create a ‘halo’ effect, “leading consumers to believe this activity is safe and protected, when it is not”.

Around 10 per cent of UK adults hold or have held cryptoassets, according to HM Revenue & Customs.

“Given the future benefits of crypto remain unclear, the Government should take a balanced approach to supporting the development of cryptoasset technologies and avoid spending public resources on projects without a clear, beneficial use, as appears to have been the case with its now-abandoned Royal Mint non-fungible token (NFT),” the report claimed.

“It is not the Government’s role to promote particular technological innovations for their own sake.”

Harriett Baldwin MP, Chair of the Treasury Committee, drew a scathing conclusion over cryptocurrency as she submitted her group’s report.

“The events of 2022 have highlighted the risks posed to consumers by the cryptoasset industry, large parts of which remain a wild west,” she said.

“Effective regulation is clearly needed to protect consumers from harm, as well as to support productive innovation in the UK’s financial services industry.

“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. By betting on these unbacked ‘tokens’, consumers should be aware that all their money could be lost.”

The committee is understood to be considering central bank digital currencies as “a separate piece of work”.

The Treasury Committee findings triggered some angry responses from UK crypto industry leaders.

Nick Jones, Co-Founder and CEO, Zumo, labelled the report as “an appalling backwards step”.

“Snatching defeat from the jaws of victory, just as it looked as though the UK was finally getting its act together on crypto,” he said.

“Given the recent turmoil in the traditional financial system, the UK should be looking to encourage alternative financial solutions, not discouraging them by likening them to gambling.

“A truly resilient future financial system shouldn’t be resistant to new ideas and structures, rather it should be supportive of them. And it should dare to integrate new ideas where they provide genuine value – not panic and revert to the perceived safety of failing methods.”

His views were echoed by Ivan Ivanchenko, co-founder and COO of cryptocurrency options trading platform Phinom Digital.

“Treating cryptocurrency trading as gambling would be a backward step for the UK’s digital currency aspirations and another demonstration that the country is fast becoming a sea of red-tape,” he added.

“Cryptocurrency has become a recognised store of value and is no different to traditional forex or stocks and shares.

“And with institutional investors accounting for as much as 70% of trading volumes on some of the most widely-used platforms, it’s time policymakers accepted that cryptocurrency is a mainstream financial asset and treat it as such.”

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