UK Lawmakers Call for Regulation of Crypto Retail Trading as Gambling
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According to the politicians, volatility and lack of intrinsic value make crypto assets risky for consumers. We will post more information in social networks.
Consumers, politicians claimed, are particularly at risk because of the volatile and nonexistent intrinsic value of most crypto assets.
A panel of British lawmakers said in a new report that trading “unbacked cryptoassets”, that is, cryptocurrencies, such as Bitcoin (BTC) and Ether (ETH), should be treated as gambling due to “significant risks to consumers, given their price volatility and the risk of losses.” Under an existing financial asset regulations, new crypto-specific regulations would be blended with existing monetary asset regulations.
In a May 17 House of Commons report, the U.K. Treasury Committee ‘strongly recommended’ regulating retail crypto trading and investment activity as gambling, consistent with the principle of ‘same risk, same regulatory outcome,’ urging the government to consider the committee’s suggestions when regulating this market.
Because of their price volatility and lack of inherent value, cryptocurrencies will “inevitably pose significant risks to consumers,” the committee warned. According to Baldwin, Bitcoin and Ether are responsible for three-quarters of the total market capitalization of crypto assets, both of which are “unbacked.”
The committee shared its concern that regulating retail trading and investment in unbacked crypto assets could create a “halo” effect that leads consumers to believe that this activity is safer than it is or is protected, thereby compromising consumer protection. All gambling in the United Kingdom, whether online or on land, is governed by the Gambling Commission under the Gambling Act 2005. Bingo halls, lotteries, bet shops, online betting companies and casinos are all covered by its oversight.
The lawmakers argued that similar restrictions should be placed on crypto exchanges, online trading platforms, and other crypto asset businesses to prevent them from being addictive.
“The events of 2022 have highlighted the risks posed to consumers by the cryptoasset industry, large parts of which remain a wild west. Effective regulation is clearly needed to protect consumers from harm, as well as to support productive innovation in the UK’s financial services industry. However, with no intrinsic value, huge price volatility and no discernible social good, consumer trading of cryptocurrencies like Bitcoin more closely resembles gambling than a financial service, and should be regulated as such. By betting on these unbacked ‘tokens’, consumers should be aware that all their money could be lost.”Harriett Baldwin MP, Chair of the Treasury Committee.
The committee also recognized the potential for some crypto assets and their underlying technology to help financial services and markets, such as reducing cross-border payments and improving financial inclusion. The British government should create an effective regulatory framework to support these developments in the U.K. while mitigating some of the risks associated with cryptocurrencies.
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