UK Treasury Committee Recommends Regulation of Cryptocurrency Trading as a Form of Gambling

A report by a UK Government treasury committee suggests that cryptocurrency trading should be regulated in the same way as gambling. The committee’s reasoning behind its recommendation is that people should be aware of the financial risk.

The committee went on to suggest that the UK Government should not spend any more money on promoting technical innovations connected to cryptocurrencies such as digital tokens.

MPs say trading can be addictive, like gambling

As part of their feedback, the committee of MPs further concluded that blockchain technology may be beneficial, but they stated that the process of cryptocurrency trading could lead to cash losses for individuals.

They likened this situation to people who use online casinos and have the protection of being able to register with GAMSTOP if they experience problems with their gambling. The other side of this protection is that many people find it restrictive and choose to play at casinos outside of the GamStop scheme that are not regulated in the UK. It follows that cryptocurrency traders may find similar regulations overly restrictive.

This is not something that concerns the committee of MPs making recommendations about the regulation of cryptocurrency trading as can be seen from this quote,

“…with no intrinsic value, huge price volatility and no discernible social good, consumer trading of cryptocurrencies like bitcoin more closely resembles gambling than a financial service and should be regulated as such.”

Harriet Baldwin - Conservative MP and Treasury committee chair

It remains to be seen whether the committee’s recommendations affect previous expectations that cryptocurrency trading would at some point fall under the jurisdiction of the Financial Conduct Authority (FCA). The committee believes that if this happens, cryptocurrency traders will believe their money is fully protected while this may not necessarily be the case.

However, indications suggest that the Treasury believes cryptocurrency risks are like those of other financial services. This being the case, it follows that cryptocurrency trading should be regulated in the same way and not like gambling. Time will tell which point of view prevails concerning the regulation of cryptocurrency trading in the UK.