Treat Crypto as Gambling Business – UK MPs Say

UK members of parliament have called for regulation of crypto in the same category as gambling business. The country’s treasury committee made this recommendation citing the risks and uncertainties associated with crypto investing, such as price volatility

A report released by the committee says that crypto assets such as Bitcoin have no intrinsic value, don’t serve any purpose in society and are used to facilitate criminal activities. The committee expressed concern that regulating crypto like any other investment asset would mislead investors to think it is safe.

It is on this ground that the MPs are calling for a regulation that regards crypto assets as gambling.

“…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 report said.

Conversely, the report also recommends that regulators keep up with innovation in blockchain – the technology that underpins crypto – since it has potential for other applications such as cross-border payments.

“The events of 2022 have highlighted the risks posed to consumers by the crypto asset industry, large parts of which remain a wild west,” said Harriet Baldwin MP, chair of the treasury committee. “Effective regulation is clearly needed to protect consumers from harm, as well as to support productive innovation in the UK’s financial services industry.”

UK Making a U-Turn?

The UK has shown tremendous support for cryptocurrencies, making it a much more friendly environment for the industry than the US. Its financial regulator, the Financial Conduct Authority (FCA) recently called for input from crypto companies in drafting regulations for the industry.

This gave the impression that the country was ready to embrace cryptocurrencies and help the industry to grow for mutual benefits. However the recommendations by the treasury committee makes it look like the country may be taking a different stand from the previous.

If implemented, the regulations will put crypto investing in the same category as gambling, which could cast a negative shadow on the industry. This doesn’t sit well with CryptoUK, an association of crypto industry players in the UK.

CryptoUK Criticizes Committee’s Report

CryptoUK has voiced its criticism of the recommendations made by the treasury committee suggesting that crypto assets be regulated as gambling. Ian Taylor, board advisor at CryptoUK expressed the board’s concern and disappointment at the the claims that the crypto industry is similar to the gambling industry.

“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.” Talylor said in a comment on the news.

“Furthermore, gambling is exempt from capital gains tax. Does the Government really wish to exclude tens of millions of pounds in tax income from gains made by the buying and selling of unbacked crypto assets?” he added.

According to HM Revenue & Customs, around 10 per cent of adults hold or have held crypto assets. It remains to be seen if the UK will implement the recommendations and lose the income tax from a booming industry like crypto which is seeing wider acceptance as corporate investors see growth potentials in it.

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