The UK government’s approach to defining cryptocurrency trading as gambling, citing international standards and risks.
Consumer trading in unbacked cryptoassets has been strongly opposed by the UK government as gambling. The Treasury Committee recently released a report that proposes classifying cryptocurrency trading as gambling rather than a financial service. This is in response to that report.
The Committee’s study, which was released in May, claimed that while cryptocurrencies like Bitcoin consume a lot of energy and have no fundamental worth, they are also used by criminals to commit fraud, frauds, and money laundering.
But in a written response to the Committee’s worries, Andrew Griffith, the Treasury’s Economic Secretary, claimed that such regulation would be against world norms and might push cryptocurrency asset activity outside.
The Committee’s proposed approach, according to his letter, “would therefore run the risk of creating misalignment with international standards and approaches from other major jurisdictions, including the EU, and potentially create unclear and overlapping mandates between financial regulators and the Gambling Commission.
“A system of gambling regulation could also fall short in effectively mitigating many of the important risks that were covered in HM Treasury’s recent consultation on cryptoasset regulation—including those related to market manipulation, insufficient prudential arrangements, and shortcomings in core financial risk management practices.”
A different strategy
The government contends that important dangers connected to cryptoassets, like market manipulation and insufficient prudential procedures, may not be adequately addressed by a regulatory framework for gambling.
In order to reduce the risks associated with unbacked cryptoassets and encourage safe innovation, HM Treasury proposes for a regulated framework for financial services.
There are existing measures in place, like as the UK’s anti-money laundering and counter-terrorist financing regime for cryptoassets and specific financial promotion laws for them.
“Trust is necessary,”
Experts in the field have strongly disagreed with the UK Treasury Committee’s recommendation to regulate consumer trade in unbacked cryptocurrency as gambling.
Olivier Fines, head of advocacy EMEA at CFA Institute, responded to the government’s rejection of regulation of the cryptocurrency business by saying: “A solid regulatory framework has to be built for the benefit of both crypto providers and users.
The application of current laws to various elements of the crypto ecosystem must be agreed upon by policymakers, or new laws must be created to fill in any gaps. To draw investors and develop crypto networks at scale, trust in the markets’ integrity is crucial.