The UK Financial Commission believes that crypto trading should be treated as a form of gambling, rather than a financial service as proposed by the government.
UK Financial Commission: Crypto is a form of gambling
The UK Treasury started consultations on how to regulate the crypto industry back in February of this year. By last month, the preliminary policy direction was announced by Finance Minister Rishi Sunak. Accordingly, the authorities want to extend existing financial market rules to the digital asset industry.
As of today (May 17), the UK Financial Commission has officially given its opinion on the above regulatory framework. Together with a group of bipartisan MPs, Harriett Baldwin, Chair of the House of Commons Finance Committee argued in the report submitted:
“Even the Bitcoin and Ethereum coins have no intrinsic value, they have large price fluctuations and do not serve a useful social purpose. Cryptocurrency trading is more similar to gambling than a financial service, and should be regulated as such.”
The Finance Commission also expressed concern that the government proposal could mislead consumers into thinking “crypto is a safe and legally protected investment channel, when in reality it is not.” have put money into crypto, users are likely to lose all their capital.
To corroborate this point, the committee cited two “living witnesses” FTX and LUNA-UST, historic crashes that wiped out trillions of dollars of the cryptocurrency market in 2022. The House committee group still concedes that underlying blockchain technology — not cryptocurrencies — could bring some benefits to financial services.
Responding to CoinDesk via email, a spokesman for the UK Treasury said:
“The risks posed by the cryptocurrency industry are typical of traditional financial services. This is where financial services regulation comes into play – rather than just regulation within the framework of gambling. I'm fast approaching to aggressively regulate the market, addressing the most pressing risks in a way that drives innovation.”
In addition, according to some lobbyists representing the traditional financial world, the UKs crypto surveillance scheme will legitimize a risky market.
On the other hand, some crypto industry supporters disagree with the UK Financial Commission. Take, for example, a statement by Richard Cannon from Stokoe Partnership Solicitors in the UK. He said that countries need to participate in the overall evolution of the financial industry and develop a clear regulatory framework, not just treating crypto investment as a form of gambling.
The CryptoUK trade association also vehemently objected to the report's classification at the top of the article. Ian Taylor - Advisor to the Board of Directors of CryptoUK said:
“We are both concerned and disappointed by these vain, false, fundamental omissions and baseless claims. They do not reflect the true nature, purpose and potential of the cryptocurrency industry. ”
In October 2022, the UK House of Commons voted in favor of adding crypto to the scope of the Financial Services and Markets Bill. In the past time, the authorities of the foggy country have stepped up the investigation process to purge the domestic cryptocurrency market, targeting large organizations such as Binance exchange or famous sports clubs.