A group of UK legislators argued in a recent report that trading in so-called “unbacked cryptoassets” like Bitcoin and Ether need to be regulated as gambling rather than as a financial activity.
UK Lawmakers Remain Skeptical of Crypto
According to a May 17 House of Commons Committee report, the UK Treasury Committee “strongly recommended” that retail crypto investment and trading activity be regulated as gambling, in accordance with the concept of “same risk, same regulatory outcome.”
Dr. Larisa Yarovaya, an associate professor at the University of Southampton, stated in documents that crypto exchanges, online trading platforms, and other businesses dealing in crypto-assets should be subject to the same level of regulation because crypto speculation “can be addictive.”
Significant Risks to Consumers
The UK lawmakers cited this statement in support of their arguments. It said that because of fluctuations in markets and a lack of intrinsic value, unbacked crypto assets will “inevitably pose significant risks to consumers.”
The committee includes 11 members of Parliament from the Labour and Conservative parties, along with the Scottish National Party, including Baldwin, who was formerly the UK Treasury’s economic secretary.
“Unbanked” Crypto Assets
Harriett Baldwin, Chair of the Treasury Committee, stated that Bitcoin and Ether constitute approximately two-thirds of the entire market value of crypto assets, both of which she claims are “unbacked.” She stated:
“We are concerned that regulating retail trading and investment activity in unbacked crypto assets as a financial service will create a ‘halo’ effect that leads consumers to believe that this activity is safer than it is, or protected when it is not.”
UK Gambling Commission to Take Over?
Gambling in the UK, both online or in person, is governed by the Gambling Commission under the Gambling Act of 2005. It regulates bingo halls, lotteries, betting shops, internet betting organizations, and casinos, with the goal of preventing compulsive gambling and implementing anti-money laundering precautions.
Moreover, as per the recent reports, lawmakers in Russia, like those in the UK, are now working on legislation to regulate different aspects of cryptocurrency adoption in the nation, which they want to approve by the end of July.