UK Government Rejects Proposal to Regulate Crypto as Gambling

Jul 20, 2023

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British lawmakers proposed to regulate crypto as gambling, but the government has other plans.

Regulating Crypto as Gambling Ineffective

The United Kingdom government has with the proposal made by the House of Commons Treasury Committee to regulate crypto retail trading as gambling. Instead, the government favors a financial services approach to oversee the crypto industry.
Regulating the cryptocurrency sector as gambling would not effectively address the risk factors, as demonstrated by the collapse of crypto exchange FTX last year. The UK financial services minister, Andrew Griffith, highlighted this point during a session with the Treasury Committee.

The UK Government responded to TSC’s ‘Regulating ’ inquiry report. both rejected the TSC’s recommendation to regulate “ & activity in unbacked as rather than as a ” –

— CryptoUK (@CryptoUKAssoc)

Crypto Assets’ Value and Purpose

The Treasury Committee’s May report claimed that crypto assets like bitcoin and ether have no intrinsic value and serve no useful social purpose. It recommended that they be regulated by the government as gambling instruments. However, crypto trading firms sarcastically questioned whether this move would protect their profits from capital gains tax.

UK’s Focus on Web3 and Regulatory Clarity

UK Prime Minister Rishi Sunak announced plans to establish the country as a web3 hub, emphasizing the importance of regulatory clarity for crypto businesses operating in the UK. The government aims to embrace blockchain technology and foster startup growth to benefit the economy.

JUST IN: 🇬🇧 UK rejected pressure to regulate and crypto as gambling rather than as a financial service – Financial Services Minister

Britain wants to become a global hub for the industry 🙌

— Bitcoin Magazine (@BitcoinMagazine)

Government’s Response and Existing Efforts

The UK government rejected the Treasury Committee’s proposal and emphasized its firm disagreement with regulating retail trading and investment activity in unbacked cryptoassets as gambling instead of financial services. The government believes such a regulatory approach could contradict globally agreed recommendations from international organizations.

Avoiding Overlapping Mandates

The government expressed concerns about the potential creation of unclear and overlapping mandates between financial regulators and the Gambling Commission if crypto were regulated as gambling. The current regulatory efforts aim to establish clear standards for approval and ensure that crypto firms operating in the UK understand the requirements.

Proposed Legislation and Timeline

The government is already working on regulatory legislation for the crypto market, which was recently presented before parliament and debated. The authorities anticipate that the legislation may be implemented by late 2023. The committee’s recommendations were taken into consideration during this process.

Conclusion

The UK government firmly disagrees with regulating the crypto market as gambling, opting for a financial services approach. It acknowledges the importance of regulatory clarity for crypto businesses and aims to establish clear standards while avoiding overlapping mandates. The proposed legislation is expected to be enforced by late 2023, taking into account the committee’s recommendations.

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