- Britain’s Financial Services Minister, Andrew Griffith, has rejected the idea of treating cryptocurrencies as gambling
- Parliament’s Treasury Select Committee recommended regulating cryptocurrencies in the same way as gambling due to consumer risks
- The UK aims to become a global crypto hub and is already working on sector rules
In a move that many will find controversial, Britain’s Financial Services Minister, Andrew Griffith, yesterday firmly opposed the proposal to classify cryptocurrencies as a form of gambling, stating that such a move would put the country at odds with both global and European Union regulators. The recommendation, put forward by Parliament’s Treasury Select Committee in May, sought to regulate cryptocurrencies as gambling due to the significant risks they pose to consumers. However, Griffith stated that adopting a gambling regulatory approach would not adequately address the risks highlighted by the recent collapse of FTX and that a different approach was needed.
UK Treasury Committee Sought Gambling Status
The UK Treasury Committee claimed in May that investing in cryptocurrencies is akin to gambling and suggested regulating them under the country’s gambling laws rather than treating them as financial services. They expressed concerns that the government’s proposal could create a false sense of security for consumers, leading them to underestimate the risks associated with crypto assets.
The Committee highlighted the lack of intrinsic value, significant price volatility, and the absence of discernible social benefits as reasons to consider crypto trading as gambling, while the UK’s financial watchdog, The Financial Conduct Authority, has previously warned investors about the potential losses involved in crypto investments.
Griffith Disagrees
Griffith, however, expressed concern that implementing a gambling regulatory framework would create a misalignment with international standards, potentially leading to overlapping mandates between financial regulators and the Gambling Commission. The European Union has already approved comprehensive rules for trading cryptocurrencies, set to come into effect from mid-2024 onwards.
Emphasizing Britain’s aspiration to become a global hub for cryptocurrencies and blockchain technology, the finance ministry has been actively working on establishing comprehensive rules for the sector.
Griffith further pointed out that such a move would be in direct contradiction to the recommendations put forth by international standard-setting bodies, including the International Organization of Securities Commissions (IOSCO) and the G20 Financial Stability Board (FSB). Both bodies, in collaboration with domestic regulators, have been working towards setting global standards for the crypto industry. In May, IOSCO proposed the world’s first set of rules for the sector, followed by additional standards from the FSB on Monday.
