July 17, 2023
The UK has introduced numerous regulatory changes to its gambling industry, including the functioning of new casino sites. But to the surprise of many, the government has turned down a proposal to classify investing in and trading cryptocurrencies as gambling.
The House of Commons Treasury Committee made the proposal in May 2023. The Committee argues that cryptocurrency trading is highly volatile and should be considered a form of gambling.
But in a long overdue response, Andrew Griffith, Economic Secretary to the Treasury, said that the Treasury 'firmly disagrees' with the Committee's analysis, which Harriet Baldwin is leading. Interestingly, both Griffith and Baldwin are Conservative MPs in the United Kingdom.
He claimed that doing so would go against the universally-accepted recommendations. He specifically mentioned international organizations and standards agencies, including:
Here is a brief summary of the grounds cited by the minister for the rejection:
“A system of gambling regulation could fail to appropriately mitigate many of the critical risks that were discussed in HM Treasury's recent consultation on crypto asset regulation – including those associated with market manipulation, inadequate prudential arrangements, and deficiencies in core financial risk management practices.”
After downplaying the Committee's request, the Treasury will continue regulating cryptocurrency under a financial services framework. Many analysts expect the "robust measures" to address the consumer concerns in May's Committee report will be part of the new approach.
Lawmakers have criticized this strategy, saying it would give crypto assets like Bitcoin and Tether false security. The Treasury cited the collapse of FTX last year, which caused substantial turbulence in the world's crypto asset markets, as evidence that crypto trading poses significant risks and consumer harm.
"The Gambling Commission has a strong track record of safeguarding consumers and the wider public by ensuring gambling is safe and fair. However, overseeing financial risks, which are akin to those which exist within financial markets, is not within the mandate or field of expertise of the Gambling Commission."