On Wednesday, the United Kingdom’s House of Commons Treasury Committee, which is made up of Members of Parliament (MPs) from different parties tasked to examine administration and expenditure, proposed to the country’s government to impose the current gambling regulations on crypto trading.
If approved, this proposal would see the UK Gambling Commission become the primary regulator of crypto activities. The agency will provide guidance and advice to businesses and individuals about prohibiting what it terms ‘unresponsible gambling’ while helping them to adopt safeguards such as counter-terrorist financing and anti-money laundering policies.
Based on the Gambling Act 2005, crypto trades will attract similar taxes imposed on betting.
As expected, the Treasury Committee did not have a lot of positive things to say about cryptocurrencies. It only mentioned their ability to minimize the cost of executing international transactions. However, while the Committee proposes a new regulatory approach to crypto, it has asked the UK government not to hinder the development of the industry.
One of the reasons that pushed the Committee to raise the proposal is the high price volatility of unbacked cryptocurrencies like Ethereum and Bitcoin. The MPs argue that wild price swings have caused investors severe losses and that crypto assets do not serve any social purpose.
Furthermore, the Committee said consumer behavior suggests that many treat crypto as gambling rather than a financial service. For this reason, the MPs want the government to stop regulating crypto trading as a financial service, arguing that it’s causing the public to believe the activity is safe when it’s not.
Crypto Players React to the UK Treasury Committee Proposal
Many crypto players have not welcomed the new regulatory proposal. Ivan Ivanchenko, the co-founder of crypto trading platform Phinom Digital, tweeted that if the UK government starts regulating crypto as gambling, the move will dent the country’s ambitions to become a crypto hub.
Meanwhile, CryptoUK’s board advisor Ian Taylor has released a statement stating that the Treasury Committee’s new proposal contradicts the previous one, which aimed at regulating crypto using the existing financial rules.
Taylor says CryptoUK is disappointed with the Committee for making “false, unsubstantiated, and unhelpful” claims.
UK’s Crypto Regulatory Environment
The Treasury Committee proposal comes a week after the Executive Director of the UK Financial Conduct Authority, Sarah Pritchard, announced that new crypto regulations targetting companies marketing to consumers in that country were on the horizon.
Pritchard said crypto firms operating in the UK would soon have to disclose the high risk associated with digital assets in their marketing materials. Firms that Fail to do so will face punishment from the Financial Conduct Authority.
With tougher rules on the way, it remains to be seen whether the United Kingdom will achieve its goal of being a crypto hub.
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