UK MPs call for cryptocurrencies to be regulated as gambling

Attitudes towards cryptocurrencies are changing rapidly in the United Kingdom and not least in the wake of a new White Paper by the UK Government which sets out to completely overhaul the gambling industry and its binding laws for stakeholders and license owners. Now, the voices calling for the regulation of digital tokens, i.e. cryptocurrencies, and holding them to the same standards as gambling, have been intensifying.

Conservative MP and Treasury committee chair Harriett Baldwin said that more measures were necessary in order to protect consumers from harm. Baldwin argued that there were many factors that made such digital assets more akin to gambling than a financial service, speaking of their huge price volatility and "no discernible social good."

She said that consumers were effectively placing wagers on assets that had no underpinning value and insisted that people should be made aware that they may end up losing money. Her comments come as part of a parliamentary Treasury committee digging into the matter.

One proposal for the regulation of cryptocurrencies by the Financial Conduct Authority was ill-received by Baldwin, who argued instead that placing the assets under the umbrella of the financial regulator could create a false feeling of safety and make consumers believe that these digital tokens are in fact safer than they truly are.

A report published on Wednesday as part of the Treasury committee’s work insisted that treating cryptocurrencies as gambling would be largely in line with their risk profile. The committee urged the government to explore a balanced approach, but similarly issued a caveat that public resources ought not to be spent on crypto assets and activities that had no clear or beneficial use case.

Not everyone has agreed with these conclusions and findings. CryptoUK, a trade association representing the cryptocurrency sector, has dismissed the conclusions of the report as "fundamentally flawed" and misleading in many ways. The trade organization also called them unsubstantiated.

According to a report by the BBC, which spoke with GamCare, a charity dedicated to tackling problem gambling in the United Kingdom, at least 300 people had placed calls in the past two years to the organization, seeking help for their investment habits that involved cryptocurrencies.

The MPS similarly cited research that indicated that 40% of new Bitcoin users were men under the age of 35, and arguably the "most risk-seeking segment." Although the calls for regulating crypto under a gambling framework have been heard before, the actual implementation is not very likely. The White Paper would have been a good opportunity to achieve that, but the matter may be best left with financial regulators, perhaps heeding the concerns of Baldwins and her colleagues.

Image credit: Unsplash.com