Crypto should be regulated like gambling, say UK lawmakers

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The call, made by Parliament’s powerful cross-party Treasury Committee, came a day after EU ministers agreed on tougher tax rules for crypto transactions.

Global authorities are increasingly concerned about the lack of oversight of the sector, whose most popular units are bitcoin and ether.

“Unsecured crypto-assets have no intrinsic value and their price volatility exposes consumers to the potential for substantial gains or losses, while serving no useful social purpose,” the Treasury Committee said in a report. .

“These features are more like a game than a financial service, an impression reinforced by the evidence we received from consumer behavior.”

He continued, “We therefore strongly recommend that the government regulate retail and investment activities in unsecured crypto-assets as games of chance rather than as a financial service.”

The value of the global cryptocurrency market, boosted by strong demand from retail investors during the Covid lockdowns, peaked at around $3.0 trillion in late 2021 but then fell off a cliff and s currently stands at just over $1.1 trillion.

The industry, which aspires to be accepted by mainstream finance, has been rocked by a series of scandals.

This includes the highly publicized collapse of the Terra cryptocurrency in mid-2022 and the failure of the FTX exchange later that year.

The Treasury Committee on Wednesday expressed caution over the risks posed by “mismanaged businesses” in the sector, as well as the growing use of crypto by fraudsters and other criminals.

Britain’s Conservative government, led by Prime Minister Rishi Sunak, is seeking to establish a regulatory framework for crypto as it seeks to avoid falling behind the EU and US.

“It is not the role of government to promote particular technological innovations for their own good,” the committee’s report added on Wednesday.

He also criticized Britain’s failed plan to sell non-fungible tokens (NFTs) or digital tokens based on cryptographic technology. Sunak unveiled the initiative as finance minister in April 2022.

The committee, however, welcomed UK proposals for greater regulation of professional crypto investors.

He added that cryptocurrencies could potentially be used “to improve efficiency and reduce the cost of payments.”

The European Union meanwhile took new steps this week to protect investors.

EU finance ministers agreed rules on Tuesday to prosecute individuals who hide their money where tax authorities have no control.

Last month, the 27-member bloc’s parliament approved the world’s first comprehensive rules covering crypto assets.

(AFP)

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