2023-6-21 22:40 |
If you are a crypto investor in the UK, then it’s worth noting that the government says it wants to regulate the industry as a financial service. But the UK Treasury Committee, a cross-party lawmaker group, see cryptocurrency trading as more like gambling and want it regulated as so.
Is crypto trading a form of gambling? Here’s what they sayIn a recently released report on crypto trading, the committee said that cryptocurrencies like Bitcoin (BTC) and ether (ETH) are “not backed by any underlying asset” and “pose significant risks to consumers”.
According to the MPs, crypto trading has similar features and risks as gambling, including being addictive and potentially exposing consumers to huge losses. Bet on crypto such as Bitcoin (BTC) carry significant risks as these are unbacked assets.
The government, however, has a different outlook and is looking to regulate crypto as financial services. In the wake of recent debate on the Financial Services and Markets Bill (FSMB), a Treasury spokesperson opined that cryptocurrencies typically posed the same risks as financial services. As such, it has consulted on putting crypto within the financial services regulation, not under the gambling regulation.
The crypto industry in the UK has rejected the Treasury Committee’s categorization of crypto trading as similar to gambling. In May, the independent industry body CryptoUK shared a statement that strongly disagreed with the Committee’s conclusion, stating that it failed to “reflect the true nature, purpose and potential of the crypto industry.”
According to the UK-based organisation, the Treasury’s conclusion was the opposite of what the HM Treasury has outlined before, particularly with the consultation proposals that aim to bring crypto activities, including trading venues into the country’s existing financial framework.
What would regulating crypto trading as gambling mean for exchanges?If the UK adopts the Treasury Committee’s recommendations, crypto exchanges and related businesses would be regulated within the same framework as gambling operators. It would mean exchanges offering crypto trading services would have to apply for and secure licences from the Gambling Commission, rules that strictly apply to online casinos.
As with Swedish casinos, which are strictly regulated by the Swedish Gambling Authority, exchanges in the UK would be required to operate within specific rules with oversight from the UK Gambling Commission.
Similar requirements will extend to crypto casinos, which are seeing greater adoption across the globe as more operators add bitcoin and other cryptocurrencies as a payment method.
When will the new rules come into effect?On Monday, June 19, the House of Lords, UK parliament’s Upper House, voted the FSMB through, bringing the bill closer to becoming law and opening the path to crypto regulation within that framework.
Notably, provisions within the FSMB include proposed regulation of crypto exchanges and other crypto businesses.But while the FSMB could herald a new regulatory framework for cryptocurrencies and stablecoins, whether they are regulated as financial services or gambling can only be clear in specific crypto rules.
In April, Andrew Griffith, the Economic Secretary at the UK Treasury, said the new rules should be expected within the next 12 months or so.
The post UK crypto regulation: What to know as MPs see crypto trading a form of gambling appeared first on Invezz.
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