UK lawmakers have called for cryptocurrencies to be regulated in the same way as gambling – causing industry leaders to speak out in crypto’s defence.
The UK Treasury Committee released a report on Wednesday (17 May 2023) arguing that unbacked cryptocurrencies, like Bitcoin and Ethereum, pose a significant risk to consumers.
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Bitcoin and Ethereum, which make up two-thirds of all cryptocurrency, are not backed up by an underlying asset.
This leads to volatility in prices and harnesses the potential for all money invested in them to be lost, the treasury committee said.
According to the committee, regulating retail investment and trading in cryptocurrencies may convince consumers that it’s safe to get involved when it’s not.
“Given retail trading in unbacked crypto more closely resembles gambling than a financial service, the MPs call on the Government to regulate it as such,” the report read.
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By GlobalDataThe report has been met with masses of disapproval from the crypto industry – many of whom have spoken out in defence of the industry.
“The Treasury Committee’s decision is disappointing, and risks doubling down on the view that the UK is closed for business when it comes to crypto and tech,” Richard Cannon, partner at Stokoe Partnership solicitors, told Verdict.
“Modern regulated economies must confront and engage with the evolution of finance, and develop a sophisticated regulatory regime which is not achieved by dismissing crypto investment as gambling,” he added.
Harriett Baldwin MP, chair of the treasury committee, commented on the report stating that cryptocurrencies had “no intrinsic value, huge price volatility, and no discernible social good.”
The MP’s comment has been slammed as “untrue” and “false” by high-profile industry heads.
CryptoUK, the first self-regulatory trade association for the UK cryptoasset industry, said in a statement: “CryptoUK strongly disagrees with the Treasury Committee’s conclusion, and we are both concerned and disappointed by these claims, which are unhelpful, false, fundamentally flawed, and unsubstantiated.
“The statement fails to reflect the true nature, purpose, and potential of the crypto industry.”
The push from UK lawmakers comes as overall investment in cryptocurrencies fell last year.
Overall investment totalled just over $14bn in 2022, falling from over $27bn in 2021, according to data collected by GlobalData.
Cryptocurrency peaked during the Covid-19 pandemic in 2020, with a recorded $30bn invested into the industry throughout the year.
GlobalData is the parent company of Verdict and its sister publications.
