According to a report released on Wednesday by a group of UK legislators, cryptocurrencies like bitcoin, ether, and others should be treated like gambling because they might be used by scammers and present serious hazards to users.
Since crypto assets presently only adhere to anti-money laundering precautions, Britain is preparing its first set of regulations for them.
According to the study from parliament’s treasury committee, bitcoin and ether make up two-thirds of all crypto assets. Because they are not backed by any asset or currency, they are subject to price volatility and the risk of losing all of the money invested in them.
A “halo” effect, which makes consumers believe an activity is safer or protected when it is not, might be produced by regulating retail trading and investment in unbacked cryptocurrencies, the report warned.
We therefore strongly urge the government to regulate retail trading and investing in unbacked crypto assets as gambling rather than a financial service, in line with its declared tenet of “same risk, same regulatory outcome,” according to the paper.
The Financial Conduct Authority has regularly cautioned consumers that investing in cryptocurrencies carries a risk of losing all of their money.
Although the market capitalization of all crypto assets is only about $1.2 trillion, they represent a sizable portion of the financial system. However, the collapse of the crypto company FTX exchange last year made it more urgent to regulate the industry.
According to Harriett Baldwin, chair of the treasury committee, the events of 2022 have brought to light the risks posed to consumers by the crypto asset market, much of which is still a wild west.
According to official statistics, 10% of UK citizens currently own or have previously owned crypto assets.
On Tuesday, the European Union passed the first comprehensive set of rules for crypto markets. Soon, worldwide regulations are expected to be proposed by international regulators.
According to the analysis, the underlying technology of crypto assets has the potential to increase payment efficiency.
