The UK’s Treasury Committee has published its report on how cryptocurrencies should be regulated.
The report said that while there may be some benefits of certain forms of cryptocurrency and in blockchain technology more widely, it noted that the market was currently dominated by “consumer speculation in unbacked crypto assets such as Bitcoin and Ether”.
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“These characteristics more closely resemble gambling than a financial service, an impression reinforced by the evidence we have received of consumer behaviour”
- “Unbacked crypto assets have no intrinsic value, and their price volatility exposes consumers to the potential for substantial gains or losses, while serving no useful social purpose.”
The Committee said crypto should not be regulated by the UK’s Financial Conduct Authority, warning that this could create a “halo effect”, where people assume that these currencies must have an air of legitimacy about them because they are regulated alongside traditional financial products. And thus:
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“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’”
