Crypto has ‘no intrinsic value’ or ‘social purpose’, lawmakers say

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The crackdown on cryptocurrency intensified today after lawmakers called for consumer commerce to be regulated like gambling.

In a new cross-party committee report, UK politicians have argued that Bitcoin and Ether have no intrinsic value and serve no useful social purpose.

They also noted several negative impacts of cryptocurrencies. Specifically, they pointed to the vast power consumption, risk to consumer merchants, and criminal use in scams, fraud, and money laundering.

Effective regulation is clearly needed.

Because of the public risks, the committee warned against the regulation of trading as a financial service proposed by the UK government.

Effective regulation is clearly needed to protect consumers from harm, as well as to support productive innovation in the UK financial services industry, said committee chair Harriett Baldwin.

However, in the absence of intrinsic value, enormous price volatility, and no discernible social good, the consumer trade of cryptocurrencies like Bitcoin is more like gambling than a financial service, and should be regulated as such. When betting on these unsecured tokens, consumers should be aware that all of their money could be lost.

Unsurprisingly, the comments sparked an uproar in the crypto community. CryptoUK, an industry lobby group, was particularly offended by the comparison to gambling.

Professional investment managers view Bitcoin and other crypto-assets as a new alternative investment class, not a form of gambling, and institutional adoption of unsecured crypto-assets has increased dramatically, says Ian Taylor , Advisor to the Board of CryptoUK.

In addition, games of chance are exempt from capital gains tax. Does the government really want to exclude tens of millions of pounds in tax revenue from gains made from buying and selling unsecured crypto assets?

Crypto has been crucial for the unbanked.

Taylor further criticized lawmakers for ignoring evidence submitted by CryptoUK. He argued they had overlooked the sectors’ movements to track, monitor and report, as well as efforts to mitigate fraud with analytics, and commitments to work closely with regulators and law enforcement. .

Additionally, he disputed claims that cryptocurrencies lack useful social purposes.

Crypto has been crucial in serving the unbanked as a force for good, making safe and efficient peer-to-peer payments accessible to the most vulnerable in our society, he said. Additionally, the report makes no mention of the tokenization of financial products, which we specifically highlighted during the evidence session as a key benefit of the technology.

The ability to represent financial products such as bonds and stocks on a blockchain has many advantages. These include faster settlement times, fewer intermediaries, thereby reducing costs, new access to markets, increased liquidity and automation through smart contract technology.

His arguments come at a difficult time for the industry, however. Confidence in cryptocurrencies has been shaken by market turmoil, the FTX scandal and the collapse of stablecoin terra. In response, governments around the world are pushing for more regulation of the sector.

As is often the case with technology legislation, the EU is leading the charge. In April, the European Parliament approved the world’s first comprehensive set of rules for crypto-assets.

In the UK, meanwhile, the election of a pro-crypto prime minister has raised hopes that the country will become a global hub for the sector. But the committee’s new report shows that such goals face powerful opposition.

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