The UK government has firmly rejected a proposal set forth by the House of Commons Treasury Committee to regulate crypto retail trading in a manner similar to the regulation of gambling activities. The proposal suggested that the UK crypto market should be overseen under the same framework used for gambling, citing the principle of “same risk, same regulatory outcome.”
The Treasury Committee’s report, released on May 17, called for tighter regulatory measures on the UK’s crypto industry, drawing a comparison between crypto investment activity and the risks associated with gambling. According to the committee, treating crypto assets as unbacked and speculative instruments warranted the same level of scrutiny and oversight as gambling to protect consumers and maintain market stability.
However, in a response dated July 20, the UK Economic Secretary to the Treasury, Andrew Griffith, officially dismissed the committee’s recommendation. The treasury expressed a clear disagreement with the notion of regulating retail trading and investment in unbacked crypto assets under the gambling framework, instead asserting that such activities should fall under the purview of financial services regulation.
Presently, all forms of gambling in the UK are governed by the Gambling Act 2005, which imposes strict regulations on various gambling businesses, including bingo halls, lotteries, betting shops, online bookmakers, and casinos. These measures are in place to combat issues related to compulsive gambling and to enforce robust Anti-Money Laundering (AML) protocols.
UK Government Voices Concerns Over Proposed Crypto Regulation
The UK government has expressed apprehensions over the potential implications of the proposed approach. The government believes that such a regulatory framework might conflict with globally agreed-upon guidelines and create overlapping mandates between financial regulators and the existing Gambling Commission.
UK government officials emphasized that they are already actively engaged in devising a comprehensive regulatory framework for the crypto market. Just last month, proposed legislation aimed at regulating the cryptocurrency industry was presented before parliament and thoroughly debated.
To set robust standards for the crypto industry and crypto-related firms, the UK government disclosed its plans for collaboration with the Financial Conduct Authority (FCA) and HM Treasury. Through this partnership, the authorities intend to ensure that crypto firms are fully informed about the necessary standards required for approval at the Financial Services and Markets Act (FSMA) gateway. Further communications will be disseminated in due course, making sure that the approval standards are explicitly available to all crypto entities operating within the United Kingdom.
Regarding the timeline, the UK government asserted that the regulatory legislation could potentially be enforced by late 2023, indicating their commitment to streamlining the cryptocurrency sector in the country.
