Britain’s Financial Services Minister, Andrew Griffith, has rejected the idea of treating cryptoassets as a form of gambling.
He argues that such a classification would not only put Britain at odds with global and EU regulators but also fail to address the risks posed by the crypto sector.
In a report released in May, Parliament’s Treasury Select Committee suggested that cryptocurrencies like bitcoin and ether should be regulated as gambling due to the significant risks they pose to consumers.
However, Griffith firmly disagrees with this recommendation, asserting that it could lead consumers to mistakenly believe that investing in crypto is safer than it actually is.
UK regulators have been warning investors about the potential to lose all their money in the volatile crypto market.
The UK government has ambitious plans to establish itself as a global hub for cryptocurrencies and blockchain technology.
Nevertheless, Griffith maintains that regulating cryptoassets as gambling would not be an appropriate solution to ensure the safety and stability of the sector.
Moreover, such an approach would contradict internationally agreed-upon recommendations from standard-setting bodies like the International Organization of Securities Commissions (IOSCO) and the G20 Financial Stability Board (FSB).
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Both organizations have been actively working on establishing standards for the crypto sector, with IOSCO having proposed the world’s first set of rules for cryptocurrencies in May.
Griffith emphasizes that adopting a gambling regulation model would also risk creating confusion and overlapping mandates between financial regulators and the Gambling Commission.
This misalignment could hinder the growth and development of the crypto industry in the UK.
The European Union has already approved a comprehensive set of rules for trading cryptoassets, scheduled to take effect in mid-2024.
However, buying or selling cryptocurrencies is not currently classified as gambling under the UK’s Gambling Act.
The UK’s gambling watchdog previously investigated a fantasy sports company called Sorare, which uses cryptocurrency for buying and selling non-fungible tokens (NFTs) representing sports stars.
The investigation aimed to determine whether the game amounted to gambling.
Looking ahead, Britain is working on regulations for stablecoins, a type of cryptocurrency backed by underlying assets to maintain a stable value.
These regulations will differentiate stablecoins from the more volatile “unbacked” cryptocurrencies like bitcoin and ether.
In conclusion, the debate over how to regulate cryptoassets continues in the UK, with the government aiming to strike a balance between fostering innovation in the sector and protecting consumers from potential risks.
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