Crypto retail trading should be regulated as gambling: UK lawmakers

Source: Yahoo Finance, U.K. ParliamentIn its arguments, the legislators referred to composed declarations from Dr. Larisa Yarovaya, an associate professor from the University of Southhampton, who stated crypto exchanges, online trading platforms and other crypto-asset companies need to be regulated with the exact same stringency as crypto speculation “can be addicting.” In a little win for crypto, the committee stated it also recognized the capacity for some crypto assets and their hidden innovation to bring benefits to financial services and markets– such as lowering the cost of cross-border payments and enhancing monetary inclusion.It stated there must be an effective regulative structure to support these developments in the U.K. while mitigating some of the risks associated with crypto possessions. Source: U.K. Parliament” We for that reason welcome the Government publishing proposals for how it prepares to regulate cryptoassets used in financial services,” the Committee wrote.Related: UK Treasury drops plans for Royal Mint NFTIncluding chair Harriet Baldwin, who when served as the Economic Secretary to the Treasury, the Committee consists of an overall of 11 members of parliament from the Labor and Conservative parties as well as the Scottish National Party.The committee stated it had actually released its inquiry into the crypto industry in July 2022 to explore the function of cryptoassets in the U.K. Research conducted by His Majestys Revenue and Customs (HMRC)– the nations tax authority– last year revealed 10% of U.K. citizens hold or have held crypto with more than 55% having never ever offered any.Chainalysis ranked the United Kingdom 17th in its 2022 crypto adoption index.

The United Kingdom is presently working on a crypto regulative structure that would blend existing financial asset laws with new crypto-specific rules. Find out more and check out the report in full https://t.co/CK7CVH2pQ1 pic.twitter.com/GvDQfiGhPU— Treasury Committee (@CommonsTreasury) May 16, 2023

It argued the rate volatility and lack of intrinsic worth imply unbacked crypto properties will “undoubtedly posture substantial risks to customers.” Treasury Committee chair Harriett Baldwin described Bitcoin and Ether as accounting for two-thirds of the total market capitalization of crypto assets, both of which she declared are “unbacked.”” We are worried that managing retail trading and investment activity in unbacked cryptoassets as a monetary service will create a halo effect that leads consumers to believe that this activity is much safer than it is, or protected when it is not.” In the U.K., all gaming– whether online or land-based– is managed by the Gambling Commission under the Gambling Act 2005. Its oversight consists of organizations such as bingo halls, lottery games, betting shops, online wagering casinos and companies, to name a few. Chart utilized by the Committee as evidence of cryptos volatility. Source: Yahoo Finance, U.K. ParliamentIn its arguments, the legislators referred to written statements from Dr. Larisa Yarovaya, an associate teacher from the University of Southhampton, who said crypto exchanges, online trading platforms and other crypto-asset businesses need to be regulated with the same stringency as crypto speculation “can be addicting.” In a small win for crypto, the committee stated it likewise acknowledged the potential for some crypto properties and their underlying technology to bring benefits to financial services and markets– such as minimizing the cost of cross-border payments and enhancing monetary inclusion.It stated there ought to be an efficient regulative framework to support these advancements in the U.K. while alleviating some of the risks associated with crypto possessions. Excerpt from the Fifteenth Report of Session 2022– 23. Source: U.K. Parliament” We therefore welcome the Government publishing proposals for how it prepares to manage cryptoassets utilized in monetary services,” the Committee wrote.Related: UK Treasury drops strategies for Royal Mint NFTIncluding chair Harriet Baldwin, who as soon as functioned as the Economic Secretary to the Treasury, the Committee consists of a total of 11 members of parliament from the Labor and Conservative celebrations along with the Scottish National Party.The committee stated it had released its questions into the crypto market in July 2022 to check out the role of cryptoassets in the U.K. Research carried out by His Majestys Revenue and Customs (HMRC)– the countrys tax authority– last year exposed 10% of U.K. people hold or have held crypto with more than 55% having actually never sold any.Chainalysis ranked the United Kingdom 17th in its 2022 crypto adoption index. Publication: Unstablecoins: Depegging, bank runs and other risks loom

Other Questions People Ask

What are the arguments for regulating crypto retail trading as gambling according to UK lawmakers?

UK lawmakers argue that crypto retail trading should be regulated as gambling due to its potential for addiction and the significant risks it poses to consumers. They reference statements from experts like Dr. Larisa Yarovaya, who emphasize that the volatility and lack of intrinsic value in cryptocurrencies can lead to harmful speculation. The Treasury Committee believes that treating unbacked crypto assets as a financial service may mislead consumers into thinking these investments are safer than they truly are.

How do UK lawmakers view the potential benefits of crypto assets despite advocating for regulation?

While UK lawmakers advocate for stricter regulation of crypto retail trading, they also acknowledge the potential benefits that some crypto assets and their underlying technologies can bring to financial services. These benefits include reducing the cost of cross-border payments and enhancing financial inclusion. The committee emphasizes the need for a regulatory framework that supports innovation while addressing the associated risks of crypto assets.

What is the current status of crypto regulation in the UK as discussed by lawmakers?

The current status of crypto regulation in the UK is evolving, with lawmakers working on a framework that blends existing financial asset laws with new, crypto-specific regulations. The Treasury Committee has been investigating the role of crypto assets since July 2022, highlighting that 10% of UK citizens have engaged with cryptocurrencies. This regulatory effort aims to mitigate risks while fostering the potential advantages of crypto technology in the financial sector.

Why do UK lawmakers believe that treating crypto trading like gambling is necessary?

UK lawmakers believe treating crypto trading like gambling is necessary due to the inherent risks associated with unbacked cryptocurrencies, which can lead to significant financial losses for consumers. They argue that the volatility of these assets creates a gambling-like environment where individuals may engage in reckless speculation. By regulating crypto retail trading under gambling laws, lawmakers aim to protect consumers from these risks and ensure a safer trading environment.

What role does the Gambling Commission play in regulating activities related to crypto trading?

The Gambling Commission plays a crucial role in regulating activities related to crypto trading by overseeing all forms of gambling under the Gambling Act 2005. This includes ensuring that organizations involved in online and land-based gambling operate within legal and ethical guidelines. As UK lawmakers consider regulating crypto retail trading similarly to gambling, the Commission's expertise will be vital in establishing standards that protect consumers while allowing for innovation in the crypto space.