British Members of Parliament (MPs) have claimed that crypto has “no intrinsic value and no useful social purpose” while suggesting the space may be better regulated if it’s treated more like gambling.
The comments were made in a new report on regulating crypto in the UK, published on Wednesday by the Treasury Select Committee, a panel of MPs from across the political spectrum.
The report claims that regulating retail trading and investment activity in unbacked crypto assets (such as bitcoin and ether) as a financial service, will “create a ‘halo’ effect, leading consumers to believe this activity is safe and protected when it is not.”
Instead, the report says UK crypto should be regulated like gambling.
“Unbacked crypto assets have no intrinsic value, and their price volatility exposes consumers to the potential for substantial gains or losses while serving no useful social purpose,” the report reads.
“These characteristics more closely resemble gambling than a financial service, an impression reinforced by the evidence we have received of consumer behavior.”
UK Crypto lobbyists aren’t impressed
In response, CryptoUK, a trade organization composed of members from various crypto companies, said it “rejects this unhelpful, false, and unsubstantiated equivalency with the gambling industry. The comparison to gambling is fundamentally flawed and does not reflect the nature, purpose, or potential of the crypto industry.”
The Treasury also does not support using gambling regulation, it told the BBC.
The report does recognize that distributed ledger technologies, commonly used for crypto assets, have the potential to improve financial services and the wider UK economy. Despite this, however, it stresses the current risks surrounding crypto as opposed to the potential benefits.
“Our predecessor committee published a report in 2018 that called for greater regulation to protect consumers from an industry it described as a ‘wild west.’ Nothing we have heard in our current inquiry has changed that impression,” the report states.
The government’s abandoned Royal Mint NFT is also referenced in the report as an example of why the government shouldn’t invest public resources in supporting crypto asset activities “without a clear, beneficial use case.”
The government doesn’t have to take on board the conclusions from the report, but a response is expected within the next two months.