In a recent report, a group of British MPs recommended that trading in so-called “unbacked cryptoassets” like Bitcoin and Ether be treated more like gambling than a financial activity. Currently, the UK is developing a framework for regulating cryptocurrencies that combines current laws governing financial assets with new crypto-specific regulations.
However, the U.K. Treasury Committee “strongly recommended” regulating retail cryptocurrency trading and investment activities as gambling in a report to the House of Commons Committee on May 17. This recommendation was in line with the adage “same risk, same regulatory outcome.”
It argued the price volatility and lack of intrinsic value mean unbacked crypto assets will “inevitably pose significant risks to consumers.” According to Treasury Committee Chair Harriett Baldwin, Bitcoin and Ether make up two-thirds of the market capitalisation of all crypto assets and are both “unbacked.”
“We are concerned that regulating retail trading and investment activity in unbacked cryptoassets as a financial service will create a ‘halo’ effect that leads consumers to believe that this activity is safer than it is, or protected when it is not.”
