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A UK regulatory panel has recently recommended that retail investing in unbacked cryptocurrencies like Bitcoin (BTC) shall be treated similarly to gambling since they are extremely volatile and have no intrinsic value.
In a report published on Wednesday, May 17, the Treasury Select Committee, a cross-party group comprising the members of Parliament “strongly recommended” this treatment for the trading of digital assets.
This recommendation comes following a months-long inquiry into how crypto assets should be overseen. However, regulating crypto trading similar to gambling would mean a departure from how other jurisdictions are treating the asset class. The report noted:
“We are concerned that regulating retail trading and investment activity in unbacked cryptoassets 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”.
As of now, nearly 10% of UK adults have been holding crypto assets. As per the convention, the UK government will have to respond to the report just within two months of publication.
Comparing Crypto to Gambling
Comparing Bitcoin investing to sports betting reflects the UK panel’s view that digital assets have “no intrinsic value, huge price volatility, and no discernible social good”. Thus, it makes them fundamentally different from traditional financial assets.
Furthermore, it will also put cryptocurrencies into the heavy tax slab as applicable to gambling. However, just like gambling businesses, crypto players will also have to verify customer identities and take measures to prevent money laundering.
The UK is not the first country to take such measures. In the past countries like Singapore have taken measures to limit retail trading in cryptocurrencies. Singapore regulators state that the volatile nature of crypto assets makes them ill-suited for most people.
While the UK tightens its grip over the crypto sector, the EU recently approved the Markets in Crypto Assets (MiCA) regulations. The EU will integrate the MiCA regulation into the country’s law over the next year. The EU has been quite ahead of other legislations when it comes to crypto regulation. On the other hand, the US has been lagging behind in introducing clear regulations in the crypto space.
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