“Crypto: Gamble or Investment? Lawmakers Push for Classification”

The United Kingdom’s parliament recently held a debate on cryptocurrencies. As a result, some Members of Parliament (MPs) concluded that cryptocurrency trading serves no social purpose and should be regulated under gambling legislation. The European Union and the UK government are creating a legal framework around crypto, and a panel of British lawmakers has classified highly volatile assets like Bitcoin and Ethereum as “gambling.” The Treasury Committee’s published report emphasized that the widespread cryptocurrency lacks oversight in trading, labeling the entire crypto sector as the “wild west.”

In their recent report, the committee reflected on their past comments and justified that their impression remains the same and hasn’t changed. They added that while blockchain might have many advantages, the crypto market is currently dominated by consumer speculation in unbacked crypto assets like Bitcoin and Ethereum, exhibiting characteristics of gambling rather than financial services.

The committee’s suggestion is that trading and investment in cryptocurrency should be classified as gambling instead of financial services. This decision would mean that the gambling commission would regulate cryptocurrency, and trading firms looking to provide crypto-related services would need a gambling license. Though regulation is viewed as a positive step, the committee cautioned about the “halo effect” of regulation, which can lead people to believe that these are legitimate financial products that can run along traditional finance products.

CryptoUK’s board advisor, Ian Taylor, expressed disappointment with the report, calling it fundamentally flawed, false, and unsubstantiated. Taylor pointed out that gambling is exempt from capital gains tax, meaning that the UK government would exclude tens of millions of pounds in tax revenue from gains made by buying and selling unbacked crypto assets.

The report did not mention “Britcoin,” a digital currency that the Bank of England plans to launch, whose value will be tied to the pound’s value.