- On Monday, members of the House of Commons Treasury Committee called for crypto to be regulated as gambling.
- Today, the UK government rejected the proposal.
- Andrew Griffth believes the Gambling Commission cannot handle crypto financial risk.
UK Lawmakers Respond to Committee Proposal
The United Kingdom lawmakers have rejected a proposal made on Monday by the House of Commons Treasury Committee.
In a document published on Thursday, the United Kingdom government has responded to the recommendations of the Committee.
Andrew Griffth, the UK Economic Secretary to the Treasury, expressed his disagreement with the recommendations of the Committee. He dissented from the Committee’s advice to regulate crypto as gambling rather than a financial service.
The Recommendations made by UK Committee on Crypto Regulations
On Monday, a panel of UK lawmakers proposed that crypto should be regulated like gambling.
The Committee recommendations were made in dissent to the UK government’s plans to regulate crypto as a financial service. The House of Commons Treasury Committee advocated their stance based on cryptocurrency volatility and its similarity with gambling.
“We are concerned that regulating retail trading and investment activity in unbacked crypto assets 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,” the Committee’s report stated.
The Committee’s report also outlined the benefits of regulating cryptocurrency as a financial service, but they concluded that the risk outweighs the benefits.
UK Government’s Dissenting Opinion on Crypto Regulation
In a written response to the Committee’s proposal, The UK Economic Secretary to the Treasury, Andrew Griffith, stated that their recommendations might go against the global international standard.
“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,” the report stated.
The United Kingdom government responded to each recommendation made by the Committee.
Regarding the risks posed by regulating crypto as a financial service, Andrew Griffith expressed the UK government’s actions in creating background legislation to curb such risks. Such legislation includes establishing the UK crypto assets anti-money laundering and counter-terrorist financing laws (AMF-CTF) and Crypto assets Financial Promotions Legislations. The legislation was introduced to minimize cryptocurrency risk and protect the people’s interests.
“In preparation for delivering an effective and efficient authorization process, the FCA has and continues to significantly increase its capacity in the Digital Assets Authorisation teams alongside continued FCA-wide recruitment of blockchain expertise,” the report argued.
The government also revealed its plans to enact some regulations to balance the benefits and risks of crypto as a financial service.
The report highlights how the collapse of FTX has enlightened the UK government on measures suitable for protecting UK consumers.
Andrew Griffith concluded that treating crypto as gambling will fail to address the risks similar to those in the financial service. He lauds the Gambling Commission’s efforts in safeguarding consumers, but he believes that managing financial risks is outside the Commission’s scope.
