UK Lawmaker: Cryptocurrencies Should Not Be Regulated as Gambling

Andrew Griffith, economic secretary at the U.K. Treasury, said equating crypto assets with a form of gambling could lead to inconsistencies with international standards and approaches in other major jurisdictions such as the European Union.

Responding to a Treasury committee report on cryptocurrency regulation, Griffith said the move could create unclear and overlapping mandates between the financial regulator and the Gaming Commission.

Cryptocurrency regulation in the UK

In his latest statement, Griffith said that regulating retail cryptocurrency exchanges in the same way that gambling would be regulated would set the UK at odds with globally agreed recommendations from international organizations and standard-setting bodies, including the International Organization of Securities Commissions (IOSCO)1 and the G20 Financial Stability Board (FSB).

"The HM Treasury strongly disagrees with the committee’s recommendation to regulate "retail trading and investing in unsecured crypto-assets as gambling rather than as a financial service. "

Griffith believes that the gambling regulatory system may not be successful in mitigating many of the key risks associated with crypto assets, such as market manipulation, inadequate prudential arrangements, and deficiencies in core financial risk management practices.

He supports the establishment of a financial services regulatory framework to address such risks of “unbacked crypto assets” and create an environment conducive to secure innovation. In this regard, Griffith noted that the government has been introducing a dedicated regulatory regime for financial promotions for crypto assets.

The legislation was introduced to Parliament last month and thoroughly considered, and is expected to come into force by the end of 2023.

Adjustment and Resistance

Prime Minister Rishi Sunak has been keen to position the country as a cryptocurrency hub, but his plans have faced strong resistance from lawmakers. Bank of England Governor Andrew Bailey has previously said that Bitcoin and other crypto assets have “no intrinsic value.”

Harriett Baldwin, chair of the U.S. Treasury Department committee, labeled the asset class the “Wild West” while highlighting events and consumer risks in 2022.

Griffith’s latest statement comes in response to a House of Commons committee report released on May 17 that “strongly” recommended that retail cryptocurrency trading and investment activities be regulated as gambling. The report basically makes recommendations based on the principle of “same activity, same risk, same regulatory outcome”.

CryptoUK, which happens to be the self-regulatory trade association for the U.K. cryptoasset industry, has also taken issue with treating cryptoassets as a form of gambling.