The UK’s finance ministry has rejected calls to regulate cryptocurrency as a form of gambling. The ministry said that treating crypto-assets as gambling would put Britain at odds with global and European Union regulators, and would fail to mitigate the risks from the sector.
The call to regulate crypto as gambling came from the UK Parliament’s Treasury Committee, which said that the current regulatory framework for crypto-assets is “inadequate” and that “gambling-style regulation” would be more appropriate. The committee argued that this would help to protect consumers from the risks of fraud and financial loss.
However, the finance ministry said that it believes that regulating crypto like gambling would be in contrast with global trends in regulation the sector.
The UK’s Minister for Financial Services, Andrew Griffith, stated:
HM 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”Such an approach would run completely counter to globally agreed recommendations from international organisations and standard-setting bodies, including the International Organization of Securities Commissions (IOSCO) and the G20 Financial Stability Board (FSB).
These recommendations are grounded in the principle of ‘same activity, same risk,
same regulatory outcome’, meaning that any cryptoasset activity that performs a similar function, and poses similar risks, to those in the traditional financial system (for example, operating a trading platform or providing custody services) are subject to regulation that ensures equivalent outcomes.The Committee’s proposed approach would therefore risk creating misalignment with international standards and approaches from other major jurisdictions including the EU, and potentially create unclear and overlapping mandates between financial regulators and the Gambling Commission
The decision by the finance ministry is a blow to those who believe that crypto-assets should be regulated more strictly. However, it is likely to be welcomed by the crypto industry, which has argued that the current regulatory framework is too burdensome.
The future of crypto regulation in the UK is still uncertain. However, the decision by the finance ministry suggests that the UK government is not yet ready to take a more interventionist approach to the regulation of crypto-assets.
What does this mean for the future of crypto in the UK?
The decision by the UK finance ministry to reject calls to regulate crypto as gambling is a positive sign for the crypto industry. It suggests that the UK government is not yet ready to take a more interventionist approach to the regulation of crypto-assets. This could help to attract more investment and innovation to the UK crypto sector.
However, it is important to note that the UK government is still committed to regulating crypto-assets. The Financial Services and Markets Bill, which is currently going through Parliament, will give the FCA more powers to supervise crypto-asset businesses. This could lead to more regulation of crypto in the future.
Overall, the decision by the UK finance ministry is a positive sign for the crypto industry. However, it is important to stay up-to-date on the latest regulatory developments in the UK.
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