Britain’s Financial Services Minister Andrew Griffith stated on Thursday that classifying crypto assets as a form of gambling would create discord with global and European Union regulators.
This statement was a response to the Parliament’s Treasury Select Committee’s report in May, which recommended regulating “unbacked” cryptocurrencies like bitcoin and ether as gambling due to the risks they pose to consumers.
UK regulators take a balanced approach
Amid concerns raised by lawmakers, British regulators have warned investors about the potential risks associated with crypto investments, cautioning that consumers might mistakenly perceive the sector as safer than it is, with the possibility of losing all their invested funds.
In response to a report by Parliament’s Treasury Select Committee, Andrew Griffith, the Financial Services Minister, expressed strong opposition to the suggestion of classifying retail trading and investment in unbacked crypto assets as gambling rather than financial services. The finance ministry disagrees with this proposal and continues working on appropriate regulatory frameworks for the crypto sector.
In May, IOSCO introduced a pioneering global approach to regulate crypto assets and digital markets, citing lessons learned from the collapse of the FTX exchange last year, which raised concerns about consumer protection.
Previously subject mainly to anti-money laundering checks, the crypto industry has advocated for a unified global regulatory framework, as various jurisdictions operate under their distinct rules.
The proposed standards encompass crucial aspects such as managing conflicts of interest, combating market manipulation, fostering cross-border regulatory cooperation, ensuring secure custody of crypto assets, addressing operational risks, and safeguarding the interests of retail customers.
The proposal to regulate crypto as gambling would counter these recommendations and that of the G20 Financial Stability Board, adding to the decision to reject the proposal.
A global center for cryptocurrencies
Despite this, the UK continues demonstrating its commitment to establishing itself as a prominent global center for cryptocurrencies and blockchain technology.
In January 2023, this objective was first highlighted when members of parliament and financial experts engaged in a comprehensive evaluation of the potential advantages and risks associated with fostering the growth of the crypto asset industry within the UK, considering the implications for businesses and consumers.
Taken together with the passage of the UK Financial Services and Markets Act 2023 on June 29, their pioneering example may be the foundation for several other countries looking to bring about stronger regulation.
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