The UK Department of Economy and Finance, Her Majesty’s Treasury, has strongly denied proposals by the House of Commons Treasury Committee to regulate cryptocurrencies like gambling.
The UK Treasury Committee had called for unbacked cryptocurrencies to be regulated like gambling back in May. A panel of lawmakers noted at the time that speculation in these assets “looks more like a game of chance than a financial service.”
However, in a answer On Thursday, Britain’s Financial Services Minister Andrew Griffith said the Treasury “disagrees” with lawmakers’ recommendation to treat crypto assets as a form of gambling.
“[Treating cryptos as a form of gambling] it would go completely against globally agreed recommendations by international organizations and regulatory bodies, including the International Organization of Securities Commissions and the G20 Financial Stability Board.”
Griffith further said that a gambling regulation system might not mitigate many critical risks, such as the shuffling of client assets alleged by the failed FTX crypto exchange. It is likely to fail to address market manipulation, inadequate prudential arrangements and shortcomings in basic financial risk management practices, the UK government has said.
“A financial services regulatory framework is more appropriate to address the risks of unbacked crypto assets and create the conditions for safe innovation.”
The government further said that they are already working to regulate the crypto market and proposed regulatory legislation has been submitted to parliament. The legislation could enter into force by the end of this year, the government added.
“HM Treasury and the FCA will work with the industry to ensure that crypto companies are fully aware of the standards required for FSMA gateway approval.”
UK Global Crypto Hub Ambitions
Although the UK government denies that crypto assets are regulated for gambling, it agrees with the Treasury Committee’s conclusion that “certain crypto assets and the underlying technology could lead to greater efficiency in financial markets and payments.”
It aligns with the UK’s ambitions to become a crypto hub, proposed last year by Rishi Sunak, then finance minister and now prime minister.
Additionally, Treasury welcomes the committee’s suggestion of a balanced approach to supporting new innovation, including crypto-asset technologies.
“We believe this recommendation is consistent with the current approach of the UK government, which is primarily focused on regulating crypto asset activity, clarifying the tax treatment of crypto asset activity, and participating in certain international organizations to help shape and develop international standards and recommendations.”
That said, the government also plans to set up Financial Market Infrastructure (FMI) sandboxes, for companies to experiment with blockchain technology, thus making the market more “efficient, resilient and transparent.”
