Last Update: May 17, 2023, 05:10 AM IST
Britain’s Conservative government, led by Prime Minister Rishi Sunak, is looking to establish a regulatory framework for crypto. (Shutterstock)
Global authorities are concerned about the lack of oversight of the sector, whose most popular units are bitcoin and ether.
UK lawmakers said on Wednesday that cryptocurrency investment in the UK should be regulated like the gambling industry.
The plea, from parliament’s powerful cross-party Treasury Committee, came a day after EU ministers agreed tougher tax rules for crypto transactions.
Global authorities are concerned about the lack of oversight of the sector, whose most popular units are bitcoin and ether.
“Unbacked cryptoassets have no intrinsic value, and their price volatility exposes consumers to the potential for substantial profit or loss,” the Treasury committee said in a report.
“These characteristics are more similar to gambling than a financial service, a notion reinforced by the evidence we found about consumer behavior.”
It continued: “We therefore strongly recommend that the government regulate retail trading and investment activity in non-backed cryptocurrencies as gambling rather than as a financial service.”
The value of the global cryptocurrency market, boosted by intense demand from small investors during the Covid lockdowns, peaked at around $3.0 trillion in late 2021, but then fell off a cliff and currently stands at just over $1.1 trillion.
The industry, which seeks acceptance by traditional finance, has been rocked by a series of scandals.
This includes the high-profile collapse of cryptocurrency Terra in mid-2022 and the failure of exchange FTX later that year.
The Treasury Committee warned on Wednesday over the risks posed by the increased use of crypto by fraudsters and other criminals, along with “poorly run businesses” in the sector.
Britain’s Conservative government, led by Prime Minister Rishi Sunak, is looking to set up a regulatory framework for crypto as it seeks to avoid falling behind the European Union and the United States.
“It is not the role of the government to promote exclusive technological innovations for its own sake,” the committee’s report said on Wednesday.
It also criticized Britain’s aborted project to sell non-fungible tokens (NFTs), or digital tokens, based on crypto technology. Sunak unveiled the initiative in April 2022 as finance minister.
The committee however praised the UK’s proposals for greater regulation of professional crypto investors.
It added that cryptocurrencies could potentially be used “to improve efficiency and reduce the cost of making payments”.
Meanwhile, the European Union took further steps this week to protect investors.
EU finance ministers agreed on Tuesday on rules to crack down on individuals who hide their cash where there is no oversight from tax authorities.
The 27-member bloc’s parliament last month approved the world’s first comprehensive set of rules covering crypto assets.
(This story has not been edited by News18 staff and is published from a syndicated news agency feed)
