UK Abandons Plan to Regulate Crypto like Gambling

The British government has recently dismissed a proposal that sought to regulate crypto trading and investment as if it were gambling.

Economic Secretary to the HM Treasury, Andrew Griffith, expressed strong disagreement with the UK Parliament’s Treasury Committee’s suggestion to categorize “retail trading and investment activity in unbacked cryptoassets” as gambling rather than a financial service.

In their report issued in May, the Treasury Committee referred to bitcoin (BTC) and ether (ETH) as “unbacked cryptoassets” with “no intrinsic value” and claimed they served “no useful social purpose.” This characterization led them to propose treating crypto trading as a form of gambling.

Economic Secretary Andrew Griffith firmly opposed the idea of equating crypto trading with gambling. He argued that such an approach contradicted established recommendations from international organizations and standard-setting bodies.

One of the bodies he mentioned was the UK Financial Stability Board (FSB), which released a comprehensive set of nine guidelines for crypto regulation in October 2022.

The FSB’s document did not suggest placing crypto asset activities under the purview of the Gambling Commission, as the Treasury Committee had advocated.

Griffith emphasized that the gambling-based regulation approach could lead to critical risks for consumers. These risks include potential market manipulation, insufficient prudential arrangements, and weaknesses in core financial risk management practices. By opting for financial regulation, the UK government aims to mitigate these risks more effectively.

The UK government ventured into crypto regulation with the publication of a consultation paper in February 2023. This marked their first significant effort to develop a regulatory framework for digital asset firms.

The government expressed a willingness to collaborate with these firms to establish a comprehensive regulatory framework that ensures a fair and secure environment for crypto trading and investment.

As part of its broader approach to crypto regulation, the UK’s Financial Conduct Authority (FCA) has recently contemplated measures to curb crypto memes.

This move demonstrates the authorities’ commitment to maintain transparency and stability within the cryptocurrency market.