Jul 20, 2023 05:05
The UK Government has
opposed the call by a panel of cross-party British lawmakers to regulate
'unbacked' crypto assets such as Bitcoin and Ether as gambling. The executive arm argued
that such treatment runs contrary to standards recommended by global bodies
such as the G20 Financial Stability Board.
‘Same Activity, Same Risk’
In a report published in May, the House of
Commons' Treasury Committee argued that unbacked cryptocurrencies lack any intrinsic value or ‘discernible
social good’ but instead carry ‘huge price volatility’. As a result, the Committee,
which is headed by Harriet Baldwin MP, called for digital asset trading to be subjected to the same rules as gambling, Finance
Magnates reported.
However, in
a letter received by the House of Commons last Friday, Andrew Griffith MP, the
Economic Secretary to the HM Treasury, relayed the government’s objection to the
proposal, according to a statement released by the UK Parliament
today (Friday).
Griffith in
the letter noted that international standards for crypto regulation are based
on the ‘same activity, same risk, same
regulatory outcome’ principle that requires extending rules imposed on
traditional financial institutions such as banks, on digital asset firms.
“The Committee’s
proposed approach would, therefore, risk
creating misalignment with international standards and approaches from other
major jurisdictions including the EU, and potentially create unclear and
overlapping mandates between financial regulators and the Gambling Commission,”
Griffith explained.
Furthermore, the Economic
Secretary maintained that supervising cryptocurrency trading as gambling could
fail to prevent many of the risks, including market manipulation, that are
associated with digital asset trading.
“A
financial services regulatory framework is more appropriate for addressing the
risks of unbacked crypto assets and creating the conditions for safe
innovation,” Griffith asserted. “This can – and will – come with a set of
robust measures to mitigate consumer risks mentioned in the Committee’s report,
including the risks of ‘consumers getting misinformed’”.
Crypto
Regulation in the UK
Meanwhile,
the debate between British lawmakers and government executives continues even
as King Charles III recently ratified the Financial Services and
Markets Act 2023. The law classifies the trading of cryptocurrencies as a
regulated activity and brings stablecoins under the scope of payment rules.
Additionally,
the Financial Conduct Authority (FCA), the British financial markets watchdog, is finalizing its rules on cryptocurrency marketing and
advertising in the country. The rules are expected to begin on October 8 this
year.
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This article was written by Solomon Oladipupo at www.financemagnates.com.
World Crypto Global
