The Treasury Committee has called for consumer cryptocurrency trading to be regulated in the same way as gambling.
In a report published today, the cross-party committee of MPs say that cryptocurrencies have “no intrinsic value and serve no useful social purpose while consuming large amounts of energy and being used by criminals in scams, fraud and money laundering”.
The report adds that crypto poses “significant risks to consumers, given their price volatility and the risk of losses”.
MPs have shown concern that regulating consumer crypto trading as a financial service – as proposed by the government – will create a “halo” effect, leading consumers to believe the activity is protected when it isn’t.
Harriett Baldwin MP, chair of the Treasury Committee, said: “The events of 2022 have highlighted the risks posed to consumers by the crypto asset industry, large parts of which remain a wild west. Effective regulation is clearly needed to protect consumers from harm, as well as to support productive innovation in the UK’s financial services industry.
“However, with no intrinsic value, huge price volatility and no discernible social good, consumer trading of cryptocurrencies like Bitcoin more closely resembles gambling than a financial service, and should be regulated as such. By betting on these unbacked ‘tokens’, consumers should be aware that all their money could be lost.”
Conflicting crypto positions
The stance from leading MPs conflicts previous positions taken by the government, such as the Treasury exploring the creation of a “digital pound” based on stablecoin technology.
The government has been considering implementing stablecoins into the UK economy for some time now following Prime Minister Rishi Sunak’s – then serving as Chancellor – stated goal of making the UK a major hub for the crypto asset world in April last year.
But after government plans to produce a Royal Mint NFT were scrapped in March, just under a year after it first announced the project, it appears the government is divided on the role of crypto assets in the UK.