LONDON, July 20 (Reuters) – Treating cryptoassets as a form of gambling would put Britain at odds with global and European Union regulators and fail to mitigate risks from the sector, Britain’s Financial Services Minister Andrew Griffith said on Thursday.
Parliament’s Treasury Select Committee said in a report in May that bitcoin, ether and other “unbacked” cryptocurrencies should be regulated as gambling given the significant risks they pose to consumers.
Lawmakers worry that treating the sector as a financial service would lead to consumers thinking it is safer than it is, with UK regulators warning investors they can lose all their money.
Britain wants to become a global hub for crypto and its related blockchain technology, and is already working on rules for the sector.
The finance ministry “firmly disagrees” with the recommendation to regulate retail trading and investment activity in unbacked cryptoassets as gambling rather than as a financial service, Griffith told the committee in a response to its report.
A system of gambling regulation would likely not address risks highlighted by the collapse of FTX, a crypto exchange, Griffith said.
It would also run completely counter to globally agreed recommendations from global standard-setting bodies, including the International Organization of Securities Commissions (IOSCO) and the G20 Financial Stability Board (FSB) with input from domestic regulators, he added.
IOSCO proposed the world’s first set of rules for the crypto sector in May, with the FSB following up on Monday with further standards.
“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 said.
The EU has approved the world’s first set of comprehensive rules for trading cryptoassets that will come into force from mid 2024 onwards.
Reporting by Huw Jones;
Editing by Andrew Cawthore and Sharon Singleton
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