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The UK government has put an end to the parliamentary committee’s push to treat cryptocurrency trading as a form of gambling, following the House of Commons Treasury Committee’s report. The report described the similarities between the crypto and gambling markets, referencing the substantial gains and losses and the lack of social benefits participants who engaged experienced. The Committee also stated that their consumer behavior findings supported the likeness; however, the economic secretary to the treasurer, Andrew Giffith rejected the characterization.
To treat the two as one and the same would be a grievous mistake and blurring the lines between a financial service and a pastime. The latter has already seen millions of crypto traders and enthusiasts use their currency when gambling online. Many opt to sign up with already high-reviewed Bitcoin no deposit casinos with bonus codes, where BTC can be used at leisure for both deposits and withdrawals.
Committee Push
The committee believes that classifying crypto trading as a form of gambling will help to address concerns over the potential risks, such as extreme financial losses and addiction, that come with betting on volatile digital assets like Bitcoin and Ethereum. The report also suggests that the government should stop investing taxpayer funds to promote the latest technological innovations before expressing the potential public benefits. This will help reduce the risks that come with crypto trading and protect consumers from additional harm.
In the UK, cryptocurrencies are recognized as unregulated and high-risk, which means that individuals are very unlikely to have protection should they encounter any issues. In fact, just this month, the country’s Financial Conduct Authority (FCA) has continued to crack down on around 34 locations across the country suspected of hosting illegal crypto ATMs. The ATMs allegedly allowed users to buy or convert money into crypto assets, but they were also reportedly used to launder illegally obtained cash.
All Crypto exchange providers in the UK, including crypto ATMs, must follow the UK Money Laundering Regulations and be registered with the FCA. To this day, no crypto ATMs are currently registered with the authority, and as such, UK residents should avoid the machines at all costs or may experience irreversible financial harm. As was the case with a consumer who contacted the Citizens Advice Bureau following a failed attempt to purchase £1,000 worth of crypto from an ATM in Sheffield. The consumer was unable to contact the crypto ATM operator and never received their funds.
Firm Stance
Although the Treasury acknowledges the numerous consumer risks highlighted in the report and agrees with the need for further guidance, it cannot endorse the committee’s proposal to treat crypto trading as a form of gambling as opposed to a financial service. Responding to the report’s recommendations, Griffiths explained that a gambling regulatory framework would not adequately address the risks associated with cryptocurrency trading, such as risk management, market manipulation, and poor loan practices. As such, Griffiths firmly stated that the crypto sector should follow the existing regulations set out for financial services, as they are better equipped to effectively oversee the market.
This approach will help to ensure that the crypto industry will operate within a regulatory framework that safeguards consumers’ rights while establishing a well-functioning financial market. Although the crypto market continues to evolve, we can anticipate ongoing deliberations as authorities try to determine the best course of action. Earlier in June, the Financial Conduct Authority (FCA) introduced new advertising measures imposing restrictions on the marketing of crypto assets to consumers, citing concerns over investor protection.
The new advertising regulations will enforce a 24-hour cooling period for first-time investors. They will also require crypto firms to produce transparent and easy-to-understand promotional material with clear risk warnings and no misleading text or imagery. Crypto firms must also ensure that individuals are equipped with the appropriate knowledge and experience to invest in crypto to safeguard their financial interests and prevent any harm.
