The UK Government has opposed the call by a panel of cross-party British lawmakers to regulate 'unbacked' crypto assets such as Bitcoin and Ether as gambling. The executive arm argued that such treatment runs contrary to standards recommended by global bodies such as the G20 Financial Stability Board.
‘Same Activity, Same Risk’
In a report published in May, the House of Commons' Treasury Committee argued that unbacked cryptocurrencies lack any intrinsic value or ‘discernible social good’ but instead carry ‘huge price volatility’. As a result, the Committee, which is headed by Harriet Baldwin MP, called for digital asset trading to be subjected to the same rules as gambling, Finance Magnates reported.
However, in a letter received by the House of Commons last Friday, Andrew Griffith MP, the Economic Secretary to the HM Treasury, relayed the government’s objection to the proposal, according to a statement released by the UK Parliament today (Friday).
Griffith in the letter noted that international standards for crypto regulation are based on the ‘same activity, same risk, same regulatory outcome’ principle that requires extending rules imposed on traditional financial institutions such as banks, on digital asset firms.
“The Committee’s proposed approach would, therefore, risk creating misalignment with international standards and approaches from other major jurisdictions including the EU, and potentially create unclear and overlapping mandates between financial regulators and the Gambling Commission,” Griffith explained.
Furthermore, the Economic Secretary maintained that supervising cryptocurrency trading as gambling could fail to prevent many of the risks, including market manipulation, that are associated with digital asset trading.
“A financial services regulatory framework is more appropriate for addressing the risks of unbacked crypto assets and creating the conditions for safe innovation,” Griffith asserted. “This can – and will – come with a set of robust measures to mitigate consumer risks mentioned in the Committee’s report, including the risks of ‘consumers getting misinformed’”.
Crypto Regulation in the UK
Meanwhile, the debate between British lawmakers and government executives continues even as King Charles III recently ratified the Financial Services and Markets Act 2023. The law classifies the trading of cryptocurrencies as a regulated activity and brings stablecoins under the scope of payment rules.
Additionally, the Financial Conduct Authority (FCA), the British financial markets watchdog, is finalizing its rules on cryptocurrency marketing and advertising in the country. The rules are expected to begin on October 8 this year.
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This article was written by Solomon Oladipupo at www.financemagnates.com.
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