Months after the government of the United Kingdom parliament’s Treasury Committee issued a report suggesting that regulators should treat cryptocurrencies like gambling, the British finance ministry has rejected these calls.
As it happens, Britain’s financial services minister, Andrew Griffith, told the committee that the finance ministry “firmly disagrees” with the recommendation to regulate retail trading and investing in unbacked crypto assets as gambling, according to the report by Reuters published on July 20.
Problems with equating crypto and gambling
Instead, the minister wrote to the chair of the Treasury Committee, Harriett Baldwin, authorities will treat the assets in the crypto sector like other financial services. Specifically:
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“[The] Treasury firmly disagrees with the Committee’s recommendation to regulate ‘retail trading and investment activity in unbacked cryptoassets as gambling rather than as a financial service,’” he wrote.
Indeed, Griffith argued that treating cryptos like gambling is “unlikely to address” the risks of mixing customer and firm assets that are related to the failure of once one of the largest crypto exchanges, FTX.
On top of that, it “would run completely counter to globally agreed recommendations from international organizations and standard-setting bodies, including the International Organization of Securities Commissions and the G20 Financial Stability Board.”
“It would also not be equipped to deal with insider dealing, market manipulation, predatory short selling and many other behaviors which can manifest themselves in both cryptoasset markets as well as traditional financial services markets.”
Reasoning behind calling gambling
As a reminder, the UK Treasury Committee issued in May a report urging for the regulation of cryptos like gambling due to the significant risks and potential use in fraudulent activities, with Baldwin stating that they had “no intrinsic value, huge price volatility, and no discernible social good.”
In response, CryptoUK, the first self-regulatory trade association for the UK crypto industry, criticized the Treasury Committee’s stance on crypto regulation, stating concern with the statements, “which are unhelpful, false, fundamentally flawed, and unsubstantiated.”
That said, the UK lawmakers are not the only ones who suggested that the regulators treat cryptos as gambling. In January, European Central Bank (ECB) executive Fabio Panetta equated investing with gambling due to their “speculative nature,” adding that digital assets are not economically useful.
On top of that, the Reserve Bank of India (RBI) Governor, Shaktikanta Das, has called for the ban of cryptos on multiple occasions on the grounds that they are speculative and similar to gambling, and such, not a viable financial product but a gambling activity, as Finbold reported in January.
