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Retail investing in unbacked cryptoassets like Bitcoin should be regulated like gambling because they are highly volatile and have “no intrinsic value,” an influential panel of UK lawmakers said.
The Treasury Select Committee, a cross-party group of members of Parliament, “strongly recommended” such treatment for trading of digital tokens in a report published Wednesday.
The recommendation, which followed a months-long inquiry into how digital assets should be overseen, runs counter to the government’s February proposal to regulate crypto like traditional financial services. Regulating retail cryptocurrency trading like gambling would also be a departure from how other major jurisdictions treat the asset class.
“We are concerned that regulating retail trading and investment activity in unbacked cryptoassets 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,” the report said.
Around 10 percent of UK adults hold or have held cryptoassets, the report said, citing data from HM Revenue & Customs. By convention, the government must respond to the report within about two months of publication, but it’s not required to follow the recommendations.
Putting investing in Bitcoin on par with betting on sports or in a casino reflects the panel’s view that cryptocurrencies have “no intrinsic value, huge price volatility and no discernible social good,” making them fundamentally different from traditional financial assets, Harriett Baldwin, who chairs the committee, said in a statement.
The UK levies steep taxes on the gambling industry to help finance services like advising on how to handle debts and addiction. Gambling businesses must also verify customers’ identities and take measures to prevent money laundering.– Bloomberg
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