Investors in the cryptocurrency have frequently been compared to gamblers by critics. But if UK legislators have their way, the sector would soon be subject to regulation similar to that which applies to casinos.
A group of UK legislative members recently released a report outlining potential hazards related to unbacked crypto assets, including a purported lack of intrinsic value and very volatile prices.
According to the research, these characteristics more closely resemble gambling than financial services since they subject customers to big profits or losses.
In a report to the House of Commons committee on May 17, the Treasury Committee of Parliament stated, “We are concerned that regulating retail trading and investment activity in unbacked crypto assets as a financial service will create a ‘halo’ effect that leads consumers to believe that this activity is safer than it is or protected when it is not.”
As instances of “unbacked crypto assets,” the paper includes bitcoin and ether, which are presumably distinguished from tokens that are backed by assets like tether, stablecoins like USDC, and even Pax Gold.
The investigation raises concerns about the government’s involvement in supporting and funding efforts linked to cryptocurrencies and highlights the need for a more critical approach to guarantee the proper use of public funds in the digital asset sector.
The cryptocurrency community is now raising concerns about whether the government wants to forfeit large tax income amounting to tens of millions of pounds earned through the buying and selling of unbacked crypto assets given the exemption of gambling from capital gains tax.
In contrast to the government’s prior suggestion from February, which advocated for regulating cryptocurrencies as a component of the present financial services system, the committee’s recent view is contrary to that.
Exchanges would be required to put up thorough admission rules and disclosure specifications for token issuers looking to list new assets under these proposed regulations.