The UK Parliament’s Treasury Committee has called for unbacked cryptocurrencies to be regulated in the same way as gambling, saying speculation in these assets “more closely resembles gambling than it does a financial service.”
“Regardless of the regulatory regime, their price volatility and absence of intrinsic value means that unbacked crypto assets will inevitably pose significant risks to consumers,” members of the Treasury Committee said in a report published on May 17.
It added that crypto in this sense should be seen in the same way as gambling, saying:
“[…] consumer speculation in unbacked crypto assets more closely resembles gambling than it does a financial service.”
In line with the principle of “same risk, same regulatory outcome,” the report warned that consumers might be led to believe that crypto is safer than it actually is if regulations are seen as pro-crypto.
“We are concerned that regulating retail trading and investment activity in unbacked cryptoassets 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,” the report said.
The report from the Treasury Committee came after British media outlet Sky News ahead of the report’s publishing revealed that members of the committee had described crypto as having “no intrinsic value and no useful social purpose.”
UK global crypto hub ambitions
The new stance from UK legislators is surprising given the UK government’s ambition of making the country an international hub for crypto.
Naturally, becoming a hub for crypto would necessitate a pro-crypto regulatory environment, but gambling-like regulations is likely not what the industry has been hoping for in this regard.
Earlier this year, the UK Treasury said that it is set to deliver “ambitious plans to robustly regulate cryptoasset activities” on a par with traditional finance.
“Under plans set out by the government today (1 February), it will seek to regulate a broad suite of cryptoasset activities, consistent with its approach to traditional finance,” the UK government said at the time.