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- UK Treasury Committee Seeks to Categorize Crypto Trading as Gambling
Angel Hristov May 17, 2023 3 min read
UK Treasury Committee Seeks to Categorize Crypto Trading as Gambling
The Treasury Committee advised the UK government to categorize crypto trading as gambling rather than as a financial service
Certain MPs in the UK seek to categorize crypto trading as a form of gambling and regulate it appropriately. Currently, the sector is considered a financial service but the Treasury Committee believes that it is more akin to gambling in many aspects.
MPs noted that cryptocurrency trading can be just as addictive as gambling. Furthermore, crypto trading being categorized as a financial service provides a “halo effect” that does not adequately communicate the risks to the customers.
The Parliament members admitted that blockchain technology may have certain advantages. However, the Treasury Committee noted that the government should “take a balanced approach” when categorizing such technologies.
The committee is firm that the government should not use taxpayer money to promote crypto without showing any clear benefits to the public.
Crypto Trading Is Similar to Gambling, MPs Say
In summary, the Treasury Committee asked the government and regulators to keep track of the latest developments and take the necessary measures to regulate innovative products. It also suggested that the government should be wary of investing taxpayer money into the vertical.
The committee said that it supports financial innovation when there are benefits. Still, it argued that until the benefits of crypto assets are confirmed, the government should communicate the risks to customers.
The MPs noted that unbacked crypto assets are a volatile and risky vertical that resembles gambling. They argued that because of its nature, it should be regulated as gambling rather than as a financial service.
2022 Highlighted the Need for Efficient Regulation
Harriett Baldwin MP, chair of the Treasury Committee, commented on the matter, saying that the events of 2022 have demonstrated the inherent risks of the crypto industry. Alluding to events such as the FTX drama and the decline of Bitcoin, among others, Baldwin said that effective regulation is a must.
Effective regulation is clearly needed to protect consumers from harm, as well as to support productive innovation in the UK’s financial services industry.Harriett Baldwin MP, chair, Treasury Committee
Baldwin added that crypto’s lack of inherent value and volatility makes it much closer to gambling than to a financial service. She argued that consumers should be aware that they risk losing all the money they invest in the sector.
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.Harriett Baldwin MP, chair, Treasury Committee
Elsewhere, the British Columbia Securities Commission levied charges against the crypto platform ezBtc which allegedly lied to its customers.
Angel has a passion for all forms of writing, be it fiction or nonfiction. His curious nature gives him an ace up his sleeve when researching a new topic. Angel’s thirst for knowledge, paired with adaptability, always helps him find his way around.