The UK Treasury Select Committee has proposed that cryptocurrency trading should be classified as gambling rather than a financial service, according to recent reports from British media outlet Sky News. The committee, comprised of influential Members of Parliament (MPs), argued that digital currencies like Bitcoin and Ether have no inherent value or societal purpose and more closely resemble gambling activities than traditional financial services.
The MPs emphasized that cryptocurrency trading and investing can be addictive, drawing parallels with the addictive nature of gambling. While recognizing the potential benefits of blockchain technology for the broader financial industry, the committee expressed concerns that speculating on the volatile prices of unbacked cryptocurrencies could result in significant financial losses for consumers.
Conservative MP Harriett Baldwin, who chairs the Treasury committee, stated that effective regulation is necessary to protect consumers from harm and foster productive innovation in the UK’s financial services sector. She further suggested that due to the absence of intrinsic value, substantial price volatility, and the lack of discernible societal benefits, consumer trading of cryptocurrencies such as Bitcoin should be regulated as gambling rather than as a financial service.
This announcement follows the UK Treasury’s earlier commitment to implementing comprehensive regulations for crypto assets, aiming to establish a robust framework comparable to that of traditional finance. However, the MPs recommended an alternative approach, advocating for the application of existing safeguarding rules that govern lotteries, betting firms, and casinos to crypto companies. They expressed concerns that subjecting the industry to financial service regulation might create a false sense of safety among consumers.
The committee’s proposal aligns with the government’s principle of “same risk, same regulatory outcome.” Although the Treasury Select Committee does not possess the authority to establish government policy, its role involves examining the UK treasury’s expenditure, administration, and policies.
