The Treasury Committee’s recent suggestion to regulate unbacked cryptocurrencies similarly to gambling has received backlash from prominent players within the crypto community, such as self-regulatory organization CryptoUK and crypto exchange Kraken UK. In a May 17 report, the committee proposed this regulation due to significant consumer risks associated with price volatility and lack of intrinsic value, ultimately promoting the principle of “same risk, same regulatory outcome.”
Such a move has faced criticism, particularly because the United Kingdom is believed to be on its way to becoming a progressive crypto hub. In a statement, CryptoUK contends that adopting this approach could overlook the nuances of the sector and hence overlook opportunities for inward investment and growth within the UK economy. The organization points out that no other global jurisdiction has taken this approach and calls for a bespoke and tailored approach to ensure that the UK does not turn into a hostile environment for businesses.
CryptoUK also warns that implementing such regulation could lead to UK consumers seeking offshore crypto platforms, a move that directly contradicts the objective of protecting consumers via regulation. Kraken UK, on the other hand, fundamentally disagrees with the Treasury’s conclusion that crypto-assets hold no intrinsic value.
According to Kraken UK, the committee’s suggestion that cryptocurrencies should be regulated as gambling products is “misguided and wholly unsuitable for UK consumers.” Not only does this proposal fail to understand the purpose and potential of the technology, but it also highlights that gambling protections don’t offer the same safeguards as those provided by financial services regulations.
CryptoUK also raises concerns regarding capital gains tax, as gambling is exempt from it. They question whether the UK government would be willing to lose out on tens of millions of pounds in tax income resulting from the buying and selling of unbacked cryptocurrencies. This highlights the serious implications of such a regulation proposal within the country’s financial landscape.
The Treasury has not yet defined the specific extent to which crypto would be regulated “as gambling,” but its report calls for imposing strict regulations and guidelines relating to consumer protections, anti-money laundering, and terrorism financing. While the debate continues over the appropriate regulation of cryptocurrencies and their perceived risk, it is crucial for the UK to strike a balance between fostering innovation and protecting consumers. The proposed gambling-style regulation, as suggested by the Treasury Committee, could prove to be a critical point of contention in shaping the future of the UK’s cryptocurrency framework.
Source: Cointelegraph
