The UK Government has rejected calls from a parliamentary committee to regulate cryptocurrency as a form of gambling as opposed to a financial service.
Financial Secretary to the Treasury Andrew Griffith said:
“[Treating crypto trading as a form of gambling] would run completely counter to globally agreed recommendations from international organisations and standard-setting bodies, including the International Organisation of Securities Commissions and the G20 Financial Stability Board.”
The minister went on to add that treating crypto trading as gambling would fail to prevent the commingling of customer assets. It would also restrict the ability of financial regulators to oversee potential issues such as market manipulation and financial risk management practices.
Earlier this year, the Treasury Select Committee suggested that “unbacked” cryptocurrencies should be regulated as a form of gambling, given the significant risks posed to consumers.
In its report the committee stated that currencies such as bitcoin “have no intrinsic value and serve no useful social purpose” while consuming large amounts of energy. They noted that the digital currencies are also being used by criminals to launder money and hide the proceeds of crime.
However, the Treasury has now stated that it ‘firmly disagrees’ with this particular aspect of the report.
Griffith added:
“The committee’s proposed approach would risk 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.
HM Treasury and the Financial Conduct Authority will work with the industry to ensure crypto firms are made fully aware of the standards required for approval.”
Earlier this year the government outlined its plans to regulate the crypto industry, consistent with its approach to traditional finance. At the time Griffith said:
“We remain steadfast in our commitment to grow the economy and enable technological change and innovation – and this includes cryptoasset technology. But we must also protect consumers who are embracing this new technology – ensuring robust, transparent, and fair standards.”
Olivia has worked as an editor and writer for major brands across multiple niches. She now focuses on the iGaming and sports betting industries.