On Thursday, July 20, the government of the United Kingdom rejected a bill submitted by the Treasury Committee seeking regulators to supervise crypto similar to gambling. The committee presented the bill titled “Regulating Crypto” on May 17 for review.
The bill proposed that the government to adopt regulations allowing retail and investment of unbanked crypto to be treated as gambling rather than financial service. The committee argued that crypto assets fall under the category where an action has an equivalent outcome.
UK Government Rejects Treasury Committee Proposal
According to the bill crypto assets activity, risk, and outcome were similar to those in the conventional market. In their submission, the committee requested the regulators to adopt the gambling regulatory approach to address the risk associated with crypto assets.
After reviewing the bill, the HM Treasury vehemently disagrees with the committee’s proposal. The Treasury noted that adopting the gambling regulation will lead to market manipulation, gaps in financial risk management practices, and a lack of prudential arrangements.
Instead of adopting the gambling regulations, the Treasury advised the regulators that implementing the financial regulatory framework would be more suitable to address risks posed by unbanked cryptos. The Treasury explained that having sound financial regulation creates a friendly environment for innovation.Therefore, adopting financial rules helps to manage the consumer’s risk, such as misinformation.
Meanwhile, the UK government plans to introduce financial promotion regulation for crypto assets. The bill was presented before the parliament, and the policymakers reviewed the drafted laws. The government is currently working on enforcing the bill into law before the end of 2023.
Benefits of Adopting Financial Regulation in Regulation Crypto Assets
The authority opposed adopting gambling regulations to prevent conflict of interest with other jurisdictions’ and international standards However, the financial regulatory agency argued that adopting the committee regulatory approach will create confusion between the role of the financial regulators and the gambling commission.
Guided by the Gaming Act of 2005, the regulators are given authority to supervise all gambling activities in the UK. Recently the regulators have imposed restrictive measures to ensure that gambling activities meet the anti-money laundering measures.
Responding to the HM Treasury report, the prominent member of parliament representing Arundel town, Andrew Griffith, highlighted the benefits of cryptocurrency in the financial sector. He acknowledged that crypto technology has massive potential to reduce transaction costs and improve cross-border payments. The MP mentioned that crypto assets have supported improving financial inclusivity and accessibility to financial services.
In his report, Griffith urged the government to implement effective regulation on crypto assets to mitigate the risk of digital assets and accelerate technological development. Griffith recounted a proposal submitted by the previous committee in 2021 urging the regulators to adopt stricter regulation on crypto assets.