UK Lawmakers Suggest Treating Crypto Assets as Gambling
The UK's plans to become a crypto hub are facing challenges, with lawmakers suggesting that crypto assets should be regulated as gambling "given they are potentially used by fraudsters and pose significant risks to consumers." This heavy-handed approach to regulation may put a damper on the UK's aspirations to become a digital asset hub.
However, the UK has also taken steps to embrace cryptocurrency and blockchain technology. In 2018, the UK government launched a Cryptoassets Taskforce to assess the benefits and risks of the technology and develop a regulatory framework. The government has also established a Fintech Delivery Panel to support innovation in the fintech sector, which includes cryptocurrency and blockchain startups.
The suggestion to treat crypto assets as gambling is not new. In 2020, the UK's Financial Conduct Authority (FCA) proposed banning the sale of cryptocurrency derivatives to retail investors, citing concerns over consumer protection and market integrity. The ban was implemented in January 2021.
However, some argue that treating crypto assets as gambling may be counterproductive. Cryptocurrencies are fundamentally different from traditional forms of gambling because they have real-world applications and can provide financial services to individuals who may not have access to traditional banking. Regulating cryptocurrencies as gambling may stifle innovation and growth in the industry.