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The United Kingdom harbors significant ambitions of establishing itself as a hub for digital assets, similar to how London functions as a center for traditional finance.
Nevertheless, these ambitions are being hindered by regulators and policymakers advocating for a stringent regulatory framework.
On May 17, it was reported that a group of UK lawmakers stated that crypto assets ought to be regulated as gambling “due to their potential use by fraudsters and the considerable risks they pose to consumers.”
The report from Parliament’s Treasury Committee noted that cryptocurrencies lack backing by any currency or asset. This results in “price volatility and the risk of total loss of all invested funds,” as reported by Reuters.
Crypto is Gambling, Not Finance
This perspective mirrors that of the United States, where various policymakers have characterized digital assets in terms ranging from ‘shadow banking’ to ‘casino chips.’
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The UK Treasury Committee indicated that regulating retail trading and investment in unbacked cryptocurrencies might create a ‘halo’ effect. This could lead consumers to believe that such activities are safer than they truly are or that they have protections when they do not.
“We therefore strongly recommend that the Government regulates retail trading and investment activity in unbacked cryptoassets as gambling rather than as a financial service, consistent with its stated principle of ‘same risk, same regulatory outcome’.”
Harriett Baldwin, chair of the Treasury Committee, described the industry as a “wild west.” She remarked that the incidents of 2022 underscored the risks faced by consumers.
In April, Andrew Griffith, the economic secretary to the UK Treasury, stated that regulations concerning crypto will be implemented within the next year.
The Views of Sunak and Bailey
Prime Minister Rishi Sunak is eager to position the nation as a crypto hub but is encountering substantial opposition from the Treasury and the Central Bank.
Bank of England Governor, Andrew Bailey, has consistently maintained that Bitcoin and similar assets possess “no intrinsic value.” UK banks are also increasingly hesitant to engage with crypto companies and are imposing obstacles for their customers.
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