The UK government said “no” to the lawmaker’s idea of regulating crypto like gambling. Instead, it believes its existing proposals are better suited to handle risks, including those arising from the FTX collapse.
House of Commons Treasury Committee raised concern that the government’s plans to treat crypto like traditional finance were not strict enough. However, they also warned that this step might create a false effect. The committee said it could mislead people that investing in Bitcoin or Ethereum is completely safe.
In a report on May 17, a group of British lawmakers suggested regulating the UK crypto market like gambling. The Treasury Committee stated that they believe in the principle of “same risk, same regulatory outcome ” when it comes to cryptocurrency investment.
On July 20, Andrew Griffith, the UK Economic Secretary to the Treasury, responded to the committee’s suggestion. He strongly disagreed with the idea of treating crypto investment and retail trading as gambling rather than a financial service. Moreover, the letter states that problems like market manipulation and insider trading exist in both crypto and traditional markets.
The government also has another concern. It believes that if they treat cryptocurrency investment as gambling, it might clash with regulations in other jurisdictions.
The UK’s Gambling Act 2005 supervises various types of gambling, like online bookmakers, casinos, bingo halls, lotteries, and betting shops. However, these businesses are closely monitored to prevent excessive gambling and money laundering.
UK Government Supports Crypto
Last month, the United Kingdom approved a bill recognizing crypto as a regulated financial activity. Additionally, the country is introducing strict rules for false crypto advertisements. Anyone who violates can face fines, including imprisonment.
The UK government believes the committee’s suggestion may lead to unspecified action. Furthermore, there may be a conflict in priorities between the gambling commission and the financial regulators.
Discussing setting standards for the crypto firms and market, the government said:
“HM Treasury and the FCA [Financial Conduct Authority] will work with the industry to ensure crypto firms are made fully aware of the standards required for approval at the FSMA gateway.”
Further, the government will give more information to make sure cryptocurrency companies in the UK can easily understand the approval standards.