A recent report by British legislators recommending the classification of cryptocurrencies as gambling has been the subject of fierce criticism from stakeholders in the UK cryptocurrency industry.
The House of Commons Treasury Committee released the report on May 17, 2023, in which it proposed regulations similar to those applied to the gambling industry because of the perceived risks associated with cryptocurrencies. The committee recommended that cryptocurrency regulation be based on the principle of “same risk, same regulatory outcome.”
CryptoUK and Blair Halliday, Kraken’s managing director, are among the prominent voices in the local crypto community that have expressed their disappointment with this proposal.
CryptoUK, in a statement released on the same day, disagreed with the classification of unbacked cryptocurrencies as gambling. They argued that this approach fails to consider the nuances of the sector and the potential benefits it brings to inward investment and overall economic growth in the UK.
‘CryptoUK strongly disagrees with the@CommonsTreasury conclusions, and we are both concerned and disappointed by these claims which are unhelpful, false, fundamentally flawed and unsubstantiated.’
Full CryptoUK response statement👇🏽https://t.co/3s9NLgoLAk
— CryptoUK (@CryptoUKAssoc) May 17, 2023
CryptoUK also pointed out that no other international jurisdiction has adopted such a strategy and emphasized the importance of adopting a customized and tailored regulatory approach to prevent the UK from becoming an unfavorable business environment. They warned that implementing the proposed strategy could lead UK customers to seek interaction with offshore cryptocurrency platforms, contradicting the objective of consumer protection through regulation.
Halliday tweeted his disagreement with the Treasury’s assertion that cryptoassets lack intrinsic value; He criticized the committee’s suggestion to regulate crypto assets as gambling products, considering it misguided and inappropriate for UK consumers.
We fundamentally disagree with the Treasury Select Committee’s conclusion that cryptoassets have no intrinsic value. It’s regrettable the committee does not support the opportunity the UK has to be a true global leader in our rapidly developing industry.
A thread 🧵
— Blair Halliday (@BSHalliday) May 17, 2023
Halliday also expressed regret over the committee’s lack of support for the UK’s potential to become a global leader in the evolving cryptocurrency industry.
Both CryptoUK and Halliday raised concerns about potential repercussions if cryptocurrency trading is classified as gambling, including the potential loss of capital gains tax. They believe that this approach fails to understand the purpose and potential of the technology and falls short of providing the same level of security as the laws governing traditional financial services.
While the report also recommended stringent regulations to protect consumer rights and address concerns about Anti-Money Laundering (AML) and terrorism financing, the Treasury has not determined the specific extent to which cryptocurrency will be regulated within the gambling framework.
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