The UK government has taken a strong stance against classifying consumer trading in unbacked cryptoassets as gambling. This is available in response to a recent Treasury Committee report that suggested regulating cryptocurrency trading more strictly than a financial service.
The Committee’s study, released in May, claimed that cryptocurrencies like Bitcoin lack intrinsic value, serve no useful social purpose, consume a significant amount of energy, and are used by criminals in fraud, scams, and money laundering.
However, Andrew Griffith, Financial Secretary to the Treasury, stated in a written response to the Committee’s concerns that such legislation may be at odds with international standards and may push the use of crypto assets overseas.
“The Committee’s proposed strategy would therefore run the risk of creating misalignment with global requirements and approaches from different major jurisdictions, including the EU, and probably create ambiguous and overlapping mandates between financial regulators and the Playing Fee,” he wrote.
“A system of playing regulation may also fail to adequately mitigate many of the important risks that had been mentioned in HM Treasury’s most recent session on cryptoasset regulation—including those related to market manipulation, insufficient prudential preparations, and deficiencies in core financial risk management practises,” according to the report.
Completely different approach
The federal government contends that a loosely enforced regulatory framework won’t be able to address the key risks associated with cryptoassets, such as market manipulation and inadequate prudential measures.
Instead, HM Treasury supports the creation of a regulatory framework for financial services to lessen the risks associated with unbacked cryptoassets and to foster secure innovation.
The UK’s cryptoasset anti-money laundering and counter-terrorist financing regime, as well as specific financial promotion laws for cryptoassets, are already in place.
“Belief is necessary,”
Business consultants have strongly objected to the UK Treasury Committee’s proposal to regulate consumer trading in unbacked crypto as gambling.
Olivier Fines, head of advocacy EMEA at CFA Institute, commented on the federal government’s rejection of regulating the cryptocurrency industry, saying: “A powerful regulatory framework must be built for the benefit of each crypto suppliers and clients.
“Policymakers should either come to an agreement on how to apply current laws to various components of the cryptocurrency ecosystem or create new laws to fill in any gaps. For traders to sign up and for crypto networks to be built at scale, belief in the integrity of the markets is essential.
