wordpress blog stats
Connect with us

Hi, what are you looking for?

Why did the UK’s Treasury Committee recommend regulating trading in crypto assets as gambling?

UK Treasury Committee recommends treating crypto assets as gambling, not financial services, citing risks to consumers and criminal use.

“We strongly recommend that the (UK) Government regulates retail trading and investment activity in unbacked crypto assets as gambling rather than as a financial service, consistent with its stated principle of ‘same risk, same regulatory outcome’,” reads the report by the Treasury Committee which consists of MPs from various political parties in the United Kingdom (UK).

It highlights that cryptocurrencies such as Bitcoin and Ether have no “intrinsic value and serve no useful social purpose, while consuming large amounts of energy and being used by criminals in scams, fraud and money laundering.”

The report concludes that these assets will pose significant risks to consumers inevitably. It noted that nearly 10 per cent of UK citizens hold or held crypto assets in the past.

“The events of 2022 have highlighted the risks posed to consumers by the cryptoasset industry, large parts of which remain a wild west,” Harriett Baldwin, Chair of the Treasury Committee, said in a statement.

It adds that “regulating retail trading and investment activity in unbacked crypto assets as a financial service will create a ‘halo’ effect that leads consumers to believe that this activity is safer than it is, or protected when it is not”.

Why it matters: It is important to note this report because the UK can end up serving as a blueprint for other nations given the cross-border nature of crypto assets. Moreover, India has reiterated on multiple occasions on how it would like to foster global consensus on crypto regulation which is the only way to ensure that laws are effective and there is no advantage of regulatory arbitrage.


STAY ON TOP OF TECH POLICY: Our daily newsletter with top stories from MediaNama and around the world, delivered to your inbox before 9 AM. Click here to sign up today! 

Advertisement. Scroll to continue reading.

What are the use cases: The report said that distributed ledger technologies such as those used in crypto assets can bring benefits to the economy. The most convincing use case is the potential to improve the efficiency and reduce the cost of making payments, especially cross-border and in lower income countries with less developed financial sectors, as per the report.

Extent of benefits remain unclear: “The extent of the benefits crypto asset technologies may bring to financial services in the future remains unclear,” the report said. It urged the UK Government to take a “balanced approach” towards supporting the development of crypto technologies, and avoid dedicating public resources on supporting such activities.

Risks from crypto: The report observed that crypto assets such as Bitcoin and Ether display “considerable price volatility, with periods of strong price appreciation in value often followed by equally rapid price falls”.

  • It said that activity in some crypto assets continues to consume very large amounts of energy especially the largest crypto asset by market capitalisation—Bitcoin.
  • It also flagged concerns around the corporate governance and controls within crypto firms. The risks posed to investors by poorly-run businesses were highlighted by several high-profile failures of crypto asset firms over 2022 such as FTX.

India’s efforts to regulate crypto: The country has been busy trying to attain  global consensus to regulate crypto assets. Shaktikanta Das, Governor, Reserve Bank of India (RBI), said that efforts were on to come up with an international framework to regulate crypto assets.

  • A recent government survey called for a global policy framework on crypto to address risks stemming from such assets. A coordinated approach has also been propagated by the Indian Prime Minister at various international fora in the past.

This post is released under a CC-BY-SA 4.0 license. Please feel free to republish on your site, with attribution and a link. Adaptation and rewriting, though allowed, should be true to the original.

Also read:

Written By

I cover several beats such as Crypto, Telecom, and OTT at MediaNama. I can be found loitering at my local theatre when I am off work consuming movies by the dozen.

Free Reads

News

Google is currently undergoing the necessary procedures for the leasehold land, which is presently under the ownership of the Maharashtra Industrial Development Corporation.

News

The pilot project for which is being launched in 19 cities this year, with a plan to launch a full-fledged rollout next year.

News

Using Google Photos the Israeli Army enhanced the facial recognition technology of Corsight AI which was made to identify Hamas associated people

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

Views

News

NPCI CEO Dilip Asbe recently said that what is not written in regulations is a no-go for fintech entities. But following this advice could...

News

Notably, Indus Appstore will allow app developers to use third-party billing systems for in-app billing without having to pay any commission to Indus, a...

News

The existing commission-based model, which companies like Uber and Ola have used for a long time and still stick to, has received criticism from...

News

Factors like Indus not charging developers any commission for in-app payments and antitrust orders issued by India's competition regulator against Google could contribute to...

News

Is open-sourcing of AI, and the use cases that come with it, a good starting point to discuss the responsibility and liability of AI?...

You May Also Like

News

Google has released a Google Travel Trends Report which states that branded budget hotel search queries grew 179% year over year (YOY) in India, in...

Advert

135 job openings in over 60 companies are listed at our free Digital and Mobile Job Board: If you’re looking for a job, or...

News

By Aroon Deep and Aditya Chunduru You’re reading it here first: Twitter has complied with government requests to censor 52 tweets that mostly criticised...

News

Rajesh Kumar* doesn’t have many enemies in life. But, Uber, for which he drives a cab everyday, is starting to look like one, he...

MediaNama is the premier source of information and analysis on Technology Policy in India. More about MediaNama, and contact information, here.

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ

Subscribe to our daily newsletter
Name:*
Your email address:*
*
Please enter all required fields Click to hide
Correct invalid entries Click to hide

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ