The British administration has rejected proposals to regulate cryptocurrency trading akin to gambling.
A government official declined a proposition from a coalition of legislators advocating for cryptocurrency trading to be regulated similar to gambling.
The UK government dismissed calls to treat cryptocurrency trading like gambling.
The government rejected the proposal following a report authored by a group of lawmakers concerning the regulation of cryptocurrency trading.
The lawmakers asserted that cryptocurrencies possess no intrinsic value and their prices exhibit significant volatility, potentially leading to substantial gains or losses for investors. They argued that cryptocurrencies lack tangible societal benefits.
The lawmakers contended that these characteristics render cryptocurrencies more akin to gambling than financial services, and their observations regarding cryptocurrency usage reinforce this belief.
However, Andrew Griffith, a government representative, rejected this notion.
Griffith stated that the government acknowledges the risks associated with cryptocurrency usage and recognizes the need for regulation. Nonetheless, he emphasized the government’s strong disagreement with the lawmakers’ proposal.
Griffith outlined several justifications for the government’s rejection.
The administration believes that a regulatory structure for financial services is the most effective method for addressing the hazards associated with cryptocurrency trading.
They contend that this strategy is superior to classifying cryptocurrency trading as gambling. This is because global organizations such as the International Organization of Securities Commissions and the Financial Stability Board of the G20 do not support such an approach.
If cryptocurrency trading is regulated as gambling, it could create conflicts with international norms. It could also lead to confusion between financial regulators and gambling authorities.
A gambling regulatory framework would be inadequate for addressing the risks inherent in cryptocurrency trading, such as market manipulation and unethical lending practices.
Regulating cryptocurrencies through financial services would be more beneficial as it would safeguard consumers. Financial regulators are better equipped to handle these types of markets.
The Gambling Commission excels at protecting individuals and ensuring fair gambling practices, but they lack the expertise to manage the financial risks associated with cryptocurrency trading.
The United Kingdom’s recent work on cryptocurrency rules, the secretary also detailed the government’s latest endeavors in this domain. He referenced a bill put forward last month that suggests creating a dedicated financial promotion regulatory framework.
Griffiths stated, “I anticipate continuing to collaborate with the committee to accomplish our objective of making the UK a leading area for crypto asset technology and investment, supported by clear and strong regulation.”
Should cryptocurrency trading be viewed as wagering? Regulators have been discussing for years whether emerging products like cryptocurrencies and NFTs should be classified as gambling.
In May of 2022, Andrew Rhodes, head of the UK Gambling Commission, stated that regulators were struggling to take action. These products often contain gambling features, but not enough to be considered pure wagering.
“We frequently observe that part of what these new products provide crosses the line, but not necessarily the entire product,” he explained.
The agency had previously taken action, issuing a warning to customers in 2021 regarding the fantasy football NFT game Sorare.
Sorare provides players with competitions where they purchase NFTs to create fantasy lineups. However, the paid nature of the game prompted warnings from UK regulators and raised concerns in its home country, France.
As a consequence, it launched free competitions in France earlier this year, although it is still under examination by the French National Gambling Authority (ANJ).
The British government panel isn’t the first group of lawmakers to suggest that digital currency trading should be treated like wagering.
Fabio Panetta, a high-ranking official at the European Central Bank, made the same claim back in January.
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