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Legislators have urged the administration to consider retail investments in digital currencies such as Bitcoin akin to gambling due to their extreme fluctuations and the inherent risk of investors potentially losing all their capital. The fiscal oversight committee of the parliament observed a striking similarity between the traits of cryptocurrency investments and those of gambling.
The committee also disapproved of the abandoned plans for the Royal Mint to create a non-fungible token (NFT). However, the Treasury informed BBC News that it did not support regulating crypto investments as gambling.
A Treasury official stated that the risks associated with cryptocurrencies are similar to those in traditional financial services and that financial services regulation, not gambling law, has a proven record in addressing these risks.
CryptoUK, a trade association, vehemently disagreed with the committee's discoveries, describing the legislators’ views on cryptocurrency as "unhelpful."
Last February, the UK requested people’s opinions on proposals to regulate crypto assets within the financial services sector. The committee, however, argued that regulating cryptocurrencies as financial services would give a false sense of security, creating a "halo effect" which makes consumers believe these investments are safer and more protected than they actually are.
The report highlighted that approximately one in 10 people in the UK hold crypto assets, most investing in cryptocurrencies like Bitcoin and Ethereum. While MPs support innovation, they noted that the potential benefits of crypto asset technologies remain uncertain.
The government has shown enthusiasm for the future of crypto, with Chancellor Rishi Sunak expressing his desire to turn the UK into a global hub for blockchain and Web3. The Treasury acknowledges the potential chances presented by crypto but is focused on "robustly regulating the market" that may suppress more problems, heightening risks in the sector.
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