UK govt rejects Parliamentary Committee’s recommendation to regulate cryptos as gambling

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The United Kingdom government has rejected a proposal made by the House of Commons Treasury Committee to regulate crypto retail trading in the same way it oversees gambling, highlighting that it “firmly disagrees” with the committee’s stance. The House Treasury Committee is headed by Harriett Baldwin from Conservative Party.

The report from UK’s parliamentary treasure committee released in May said, “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’.”

In the U.K., all forms of gambling are governed under the Gambling Act 2005. Businesses, including bingo halls, lotteries, betting shops, online bookmakers and casinos, are under scrutiny to curb compulsive gambling and implement Anti-Money Laundering measures. The UK government is under immense pressure to reform the two decade old law with the advent of internet gambling.

In a July 20 response to the committee, U.K. Economic Secretary to the Treasury Andrew Griffith rejected the proposal and said that the treasury firmly disagrees with the “Committee’s recommendation to regulate retail trading and investment activity in unbacked cryptoassets as gambling rather than as a financial service.”

The government response noted that such an approach has the potential to completely counter the globally agreed recommendations from international organizations and standard-setting bodies.

In 2022, Rishi Sunak, then finance minister and now prime minister, said he wanted to make the U.K. a crypto hub, but the sector has warned its rulemaking is trailing behind rival jurisdictions such as the European Union.

The British government said the committee’s recommendations can potentially create unclear and overlapping mandates between financial regulators and the Gambling Commission.

The government added that it is already working on regulating the crypto market, and proposed regulatory legislation was put before parliament and debated last month.