Great Britain: Crypto trading not gambling after all?
Cryptocurrencies will be classified as gambling in the future, if the UK Treasury committee has its way. Now the economic secretary to the Treasury, Andrew Griffith, has vetoed the bill. He is convinced that such a law would do nothing to prevent risks and would create massive problems with other jurisdictions.
As we reported in June this year, the UK Treasury Committee wants to regulate cryptos or crypto trading as gambling. The main reason for this is that, according to politicians, such transactions are very risky.
The draft was immediately met with much criticism. In particular, the fact that the British government actually wants to strengthen crypto technologies in its country and thus unleash considerable economic potential stands in stark contrast to a classification as gambling for experts.
Recently, Andrew Griffith, the UK's business secretary, raised the issue. He believes that if cryptocurrencies are classified as gambling in the future, it will lead to a difficult conflict with European and global regulators. Moreover, such regulation would in no way reduce the risks of the sector, Griffith said in a statement.
The trade minister's arguments are strong
To make his point, Griffith draws a comparison:
- If a system of gambling regulation were in place, the potential risks highlighted by the collapse of FTX would probably not be addressed.
- Moreover, the bill would run completely counter to the recommendations of global standardisation bodies. The risks of friction would be immense.
Broadly, Andrew Griffith argues that the approach proposed by the UK Treasury would lead to a misalignment with international standards. Directives from the EU and other major international jurisdictions would be effectively contravened. Unclear and overlapping mandates between financial regulators and the Gambling Commission would be inevitable.
Griffith also raises the criticism, which has been voiced before, that it would be difficult to reconcile gambling regulation with the government's intention to promote cryptocurrencies.
The background to the debate can be summarised as follows
In May 2023, the UK Treasury Committee called for cryptocurrency trading to be regulated as gambling. It based this on a report by a group of cross-party MPs, which made clear that cryptos have no intrinsic value. This would make using or trading them more like betting on sports than a traditional financial investment. Classification as gambling would be the logical consequence.
Conclusion
The regulation of cryptocurrencies in the UK is unclear and will remain so for some time. Nothing has been decided yet - and the recurring criticism and debate is unlikely to lead to agreement and a clear roadmap any time soon.
The situation is different in the US, where the authorities are taking a tough stance against the crypto industry. England, on the other hand, is still considered a liberal crypto economy. As a result, even one of the most influential and crypto-friendly venture capital groups - Andreessen Horowitz - recently announced that it is opening an office in London.
Image source: https://pixabay.com/de/photos/london-h%C3%A4user-des-parlaments-1042240/
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