UK Lawmakers Clash over Regulation of Bitcoin and Ethereum, Labeling Them as Gambling
A cross-party lawmaker group in the UK has raised concerns about the regulation of unbacked digital assets such as Bitcoin (BTC) and Ethereum (ETH), likening them to gambling. The Treasury Committee expressed worries that the government’s plans to regulate these assets as financial services may mislead consumers into believing they are safe and protected. Despite these concerns, the UK government is standing firm on its proposal to regulate cryptocurrencies under existing financial services regulations.
The Treasury Committee, which launched an inquiry into the crypto industry in July, voiced its concerns about the government’s regulatory approach. The committee believes that investing in cryptocurrencies, with their lack of intrinsic value and high price volatility, resembles gambling more than a financial service. Chair of the Treasury Committee, Harriett Baldwin, emphasized that consumers need to be aware of the risk of losing all their money when trading these unbacked digital assets.
The UK government has solicited feedback from industry stakeholders on its proposed regulations for the local crypto industry. The government intends to extend existing financial markets rules to establish an authorization regime for digital asset service providers and regulate crypto as financial activities. The government argues that financial services regulation, with its proven track record of mitigating risks, is more appropriate than gambling regulation. It aims to strike a balance between robustly regulating the market and promoting innovation.
Not everyone agrees with the Treasury Committee’s position. Crypto advocates argue that dismissing crypto investments as gambling oversimplifies the complexity of these assets and fails to recognize their potential benefits. Richard Cannon, a partner at Stokoe Partnership Solicitors, emphasized the need for modern regulated economies to engage with the evolution of finance and develop a sophisticated regulatory regime that accommodates crypto investments.
While expressing concerns about the gambling-like nature of crypto investments, the committee also called on the government to stay abreast of technological developments that underpin crypto assets. It recognized the potential for productive innovations to emerge from these technologies and urged the government to ensure its regulatory approach keeps pace with such advancements.
The debate surrounding the regulation of unbacked digital assets in the UK continues to intensify. Lawmakers are divided over whether to classify cryptocurrency investments as gambling or financial services. While the Treasury Committee argues for stricter regulation due to perceived risks, the government maintains that existing financial services regulations are sufficient.
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