UK Treasury Commitee Asks Government to Regulate Crypto Just Like Gambling
The Treasury department of UK has decided to treat digital asset sector as unbacked entity. It means that they plan to treat the crypto markets as a case that has no intrinsic value.
Under this new regulatory light, the crypto market will fair like a gambling product more than a financial instrument. There have been various financial experts that have likened cryptocurrencies to betting before.
However, the new stance of the regulators and lawmakers in UK is now planning to impose the same laws on crypto market that govern the casinos. To this end, a member of UK parliament has recently issued a report on the matter of cryptocurrency risks that are related to unsupported cryptocurrencies.
It entails that such digital assets do not offer any carry any inherent value and lead to extreme price volatility. This stance assumes that such crypto products may expose the consumers to massive profits or losses.
The report issued by UK parliament member has suggested that cryptocurrency market volatility can create chances of massive losses or profits. Therefore, the unsupported crypto products should be classified as gambling products.
The report also made note of the Halo effect, claiming that it may lead the consumers to treat cryptocurrencies as more safe than reality. At the same time, retail investors may assume that these cryptocurrencies are protected but they are not backed.
The Treasury Committee presented and discussed the report on 17 May in the House of Commons. This report has cast Bitcoin and Ethereum as examples of unbacked cryptocurrencies.
According to this report, these unbacked cryptocurrencies are distinct from backed digital assets such as stable project named Tether or USDC and Pax Gold. There has been a severe opposition from CryptoUK on this matter.
UK Crypto Association Protest Against HM Treasury
CryptoUK is the English association of cryptocurrency market in the territory. It has rebuked the new stance of the UK parliament concerning crypto regulations. They have maintained that the new perspective will stifle the innovation in the industry and burn down any possibilities for investment and economic growth that the sector can foster.
Ian Taylor is the board member at CryptoUK. He drew attention to the clash of the latest statement issued by the Treasury and its consultation process. In the past, HM Treasury had issued a proposal that aimed to include new trading platforms and other OTC trading networks under the scope of the existing regulatory framework.
He highlighted that most financial brokers view crypto assets as a diversification product rather than gambling instrument. He also mentioned that gambling is exempted from capital gains taxes.
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