Andrew Griffith, economic secretary to the UK Treasury, said that equating crypto assets as a form of gambling would risk creating misalignment with international standards and approaches from other major jurisdictions, including the European Union.
Responding to a Treasury Committee’s report on regulating crypto, Griffith said that such a move would potentially create unclear and overlapping mandates between financial regulators and the Gambling Commission.
Regulating Crypto in the UK
In the latest statement, Griffith said that regulating retail crypto trading in the same way it oversees gambling would put Britain at odds with globally agreed recommendations from international organizations and standard-setting bodies, including the International Organization of Securities Commissions (IOSCO)1 and the G20 Financial Stability Board (FSB).
“HM Treasury firmly disagrees with the Committee’s recommendation to regulate “retail trading and investment activity in unbacked crypto assets as gambling rather than as a financial service.”
According to Griffith, a system of gambling regulation might not be able to successfully mitigate many of the critical risks associated with crypto assets, such as market manipulation, inadequate prudential arrangements, and deficiencies in core financial risk management practices.
He endorsed a financial services regulatory framework for addressing such risks of “unbacked crypto assets” and creating an environment conducive to safe innovation. To that extent, Griffith pointed out that the Government has been in the process of introducing a dedicated financial promotions regulatory regime for crypto assets.
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The legislation was presented to Parliament last month and underwent thorough deliberation and is slated to come into effect by late 2023.
Regulation and Resistance
Prime Minister Rishi Sunak has been keen on positioning the country as a crypto hub, but his plans have met significant resistance from lawmakers. Bank of England Governor Andrew Bailey, for one, previously argued that Bitcoin and other crypto assets have “no intrinsic value.”
Harriett Baldwin, chair of the Treasury Committee, flagged the asset class as a “wild west” while highlighting the 2022 events and the consumer risks.
Griffith’s latest statement is in response to a report published on May 17 by the House of Commons Committee, which “strongly” suggested regulating retail crypto trading and investment activity as gambling. The report essentially based the recommendations on the principle of “same activity, same risk, same regulatory outcome.”
CryptoUK, which happens to be a self-regulatory trade association for the UK crypto-asset industry, also expressed dissatisfaction over treating crypto assets as a form of gambling.
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