A recent recommendation from a UK regulatory panel suggests that retail investing in unbacked cryptocurrencies like Bitcoin should be treated similarly to gambling. This is due to their extreme volatility and lack of intrinsic value. The Treasury Select Committee report published on May 17 shares their concerns that regulating retail trading and investment activity in unbacked cryptocurrencies as a financial service may create a false sense of security among consumers when in reality, it is not safer or protected.
It is significant to note that nearly 10% of UK adults currently hold crypto assets. The UK government is expected to respond to this report within two months of publication. Comparing cryptocurrency investing to sports betting is based on the panel’s view that digital assets possess no intrinsic value, massive price volatility, and no discernible social good, making them dissimilar from traditional financial assets.
Treating cryptocurrencies like gambling could also result in heavier taxes placed on the assets, which gambling businesses typically face. Crypto businesses would need to follow gambling regulations, including verifying customer identities and implementing measures to prevent money laundering.
However, the UK’s approach differs from how other jurisdictions treat the asset class. For instance, the European Union (EU) recently approved the Markets in Crypto Assets (MiCA) regulations, which will be integrated into the country’s laws over the next year. The EU has consistently been ahead in terms of cryptocurrency regulation as opposed to the US, which lags in providing clear guidelines for the crypto space.
While countries like Singapore have taken measures to limit retail trading in cryptocurrencies, citing their volatile nature as being unsuitable for most people, it is important for investors to weigh the pros and cons of such regulations. Restrictions on cryptocurrencies like those proposed by the UK may promote responsible investments and consumer protection but could hinder innovation and growth within the industry.
In conclusion, the UK’s potential move to regulate unbacked cryptocurrencies as gambling presents a controversial yet thought-provoking approach. This decision could signal how other countries might choose to address the challenges presented by the emergence of digital asset trading. While the regulation might safeguard some consumers from potential losses, it could also hinder the expansion of a rapidly growing market, ultimately stifling the growth of innovative financial technologies.
Source: Coingape
