The UK government has rejected a proposal by the House of Commons Treasury Committee to regulate crypto retail trading similarly to gambling. In a committee report released on May 17, British lawmakers recommended regulating the UK crypto market akin to gambling.
The Treasury Committee asserted that crypto investment activity aligns with the principle of “same risk, same regulatory outcome.” The government strongly disagreed with the committee’s stance on the matter.
The authority clarified that crypto retail trading would be regulated similarly to any other financial service. Andrew Griffith, Britain’s financial services minister, emphasized that categorizing digital assets as gambling would put them in conflict with the European Union and global regulators.
He stated that the treasury firmly disagrees with the “Committee’s recommendation to regulate retail trading and investment activity in unbacked digital assets as gambling rather than as a financial service.” In the UK, all types of gambling fall under the regulation of the Gambling Act 2005.
UK Government Considers Crypto Legislation By Late 2023
The Parliament’s Treasury Select Committee had suggested to the ministry that Bitcoin (BTC), Ethereum (ETH), and other significant “unbacked cryptocurrencies should be subjected to regulation,” as the government official called them.
British lawmakers express concerns that subjecting the digital asset sector to financial services scrutiny may “mislead users into believing it is safer than it truly is, potentially resulting in losing all their money,” Reutes wrote.
The British government believes the committee’s recommendations could create unclear and overlapping mandates between financial regulators and the Gambling Commission.
The government also mentioned that it is “actively” working on regulating the digital asset market. Proposed regulatory legislation was presented to parliament and underwent debate last month.
The British government further indicated that this legislation might be enacted by late 2023 and emphasized that the committee’s recommendations have been considered.
When discussing the establishment of standards for the digital assets industry and cryptocurrency firms, the government mentioned:
HM Treasury and the FCA [Financial Conduct Authority] will work with the industry to ensure crypto firms are made fully aware of the standards required for approval at the FSMA gateway. Further communications will be provided in due course to ensure standards for approval are clearly available to crypto firms operating in the UK.
Griffith asserted that implementing a system of gambling regulation would not “effectively” address the risks associated with digital assets, as happened with the collapse of FTX.
Adopting such an approach would also lead to a divergence from globally accepted recommendations by prominent regulators like the International Organization of Securities Commissions (IOSCO) and the G20 Financial Stability Board (FSB).
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