Investing in cryptocurrency has been compared to gambling and should be subject to regulation, according to a demand made by MPs. The Treasury Select Committee has expressed concern over the significant risks posed to consumers by cryptocurrencies due to their volatile prices and the potential for financial losses. In a report, MPs argue that regulating consumer crypto as a financial service, as proposed by the government, may create a false sense of safety and protection. Experts have suggested imposing levies on speculative activities involving cryptocurrencies to support debt advice and addiction services. Additionally, the report highlights the need for stricter controls to prevent investors from being misinformed by crypto companies, particularly on social media platforms.
Citing research conducted by the Bank for International Settlements, the report reveals that up to 80% of Bitcoin investors between 2015 and 2022 likely experienced financial losses. Several prominent crypto companies, including the FTX cryptocurrency exchange, collapsed in 2022. To address these concerns, MPs propose regulating cryptocurrency trading similarly to gambling, where a dedicated regulatory body, the Gambling Commission, offers guidance and safeguards against issues like problem gambling, money laundering, and terrorist financing.
The Financial Conduct Authority (FCA) disclosed that 85% of cryptoasset firms seeking registration under the FCA’s Anti-Money Laundering and Counter Terrorist Finance regime were rejected. Chairman of the Treasury Select Committee, Harriet Baldwin, emphasizes that large parts of the cryptoasset industry still resemble a “wild west” and calls for effective regulation to protect consumers and foster innovation in the UK’s financial services sector. She argues that given the lack of intrinsic value, extreme price volatility, and absence of discernible social benefits, consumer trading of cryptocurrencies like Bitcoin closely aligns with gambling and should be subject to corresponding regulations. It is crucial for individuals betting on these unsupported “tokens” to be aware that they risk losing all their money.
MPs also criticize the allocation of public resources to support cryptoasset activities without clear and beneficial reasons, particularly citing the release of the Royal Mint NFT. Although the government aimed to position the UK as a global hub for crypto-asset technology and investment by requesting the Royal Mint to create an “NFT for Britain,” MPs argue that it is not the government’s role to promote specific technological innovations for their own sake. According to HM Revenue & Customs, approximately 10% of adults in the UK currently hold or have held cryptoassets.
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