Advertisment

UK Lawmakers Call for Regulation of Cryptocurrencies as Gambling

author-image
Ayesha Mumtaz
Updated On
New Update

Risks and Volatility Highlighted

Advertisment
A panel of UK lawmakers has released a report recommending that cryptocurrencies like Bitcoin and Ether be regulated as gambling due to the risks they pose to consumers. The report emphasizes the potential use of these digital assets by fraudsters and the absence of backing by any currency or asset, leading to price volatility and the risk of total investment loss. With Bitcoin and Ether accounting for a significant portion of the crypto market, the lawmakers argue that regulating retail trading and investment in unbacked cryptocurrencies as gambling would align with the principle of treating similar risks consistently.

Consumer Protection and Perception

Advertisment
The report highlights the need to regulate cryptoassets to protect consumers. By categorizing them as gambling, the lawmakers believe it will create a clearer understanding of the risks involved. The current lack of regulation can mislead consumers into thinking the activity is safer or more protected, potentially leading to financial losses. The Financial Conduct Authority has previously warned individuals about the potential for complete loss when investing in cryptocurrencies, and the report aims to address this concern by urging the government to treat crypto trading and investment as gambling activities.

Urgency for Regulation

Advertisment
The collapse of the crypto firm FTX Exchange in 2022 has intensified the call for regulation in the sector. The report recognizes the risks faced by consumers and the need to establish rules to mitigate them. With a total market capitalization of approximately $1.2 trillion globally, cryptocurrencies represent a small fraction of the financial system. However, the report emphasizes the importance of safeguarding individuals from the potential pitfalls of unregulated crypto markets, referring to parts of the industry as the "wild west."

UK and Global Perspectives

Advertisment
While the UK is planning its first rules for cryptoassets, the European Union recently approved comprehensive regulations for crypto markets. The report emphasizes the significance of global coordination in regulating cryptocurrencies, with international regulators expected to propose global norms in the near future. The call for regulation in the UK aligns with efforts to establish consistent rules and protect consumers worldwide.
Overall, the report from UK lawmakers highlights the need for regulation in the crypto industry, specifically categorizing cryptocurrencies as gambling to ensure consumer protection and mitigate risks. The aim is to establish clearer guidelines for retail trading and investment in unbacked digital assets, emphasizing the potential loss of investment and the need for consistent treatment of similar risks. With both UK and global regulatory efforts underway, the focus is on creating a safer and more secure environment for individuals participating in the crypto market.
Bitcoin FinancialSecurity ConsumerProtection CryptoMarket cryptoinvestment digitalassets FraudPrevention riskmanagement CryptoRegulation CryptocurrencyGambling Ether CryptocurrencyRisks InvestmentSafety FinancialRegulation Volatility CryptocurrencyNews RegulatoryFramework UKLawmakers CryptocurrencyVolatility
Advertisment
Advertisment