Crypto trading ‘is just as risky as gambling’, MPs warn
Crypto trade ‘is just as risky as gambling’ and should be better regulated, MPs warn
The Wild West crypto industry should be regulated in the same way as gambling, according to MPs.
Trading cryptocurrencies such as bitcoin is largely unregulated in the UK and has come under fire for its volatility and its link to addictive behaviour.
Now MPs on the Treasury Select Committee are calling on the government to consider crypto trading as a form of gambling rather than a financial service.
The cross-party committee argues that this will prevent the so-called ‘halo’ effect, leading consumers to believe it is completely safe and protected, as well as reflecting the nature of crypto trading, which is more akin to online betting.
The report said, “With no intrinsic value, massive price volatility, and no discernible social good, the consumer trade in cryptocurrencies like bitcoin resembles gambling more than a financial service, and should be regulated as such.”
High Risk: Trading cryptocurrencies like bitcoin is largely unregulated in the UK and under fire for its volatility and links to addictive behavior
The Financial Conduct Authority (FCA) oversees crypto companies but does not directly regulate assets.
The gambling sector is regulated by the UK’s own watchdog, which provides advice and guidance – as well as sanctions – to companies operating in the sector.
The report comes as concerns about crypto have increased in recent months following the collapse of cryptocurrency exchange FTX, which wiped out billions of pounds of the value of the wider crypto market and bankruptcies of rivals.
Tory MP Harriett Baldwin, the chair of the committee, said: “The events of 2022 have highlighted the risks to consumers posed by the crypto-asset industry, large parts of which are still a Wild West.
By betting on these unbacked tokens, consumers should be aware that all their money could be lost.”
According to HM Revenue & Customs, around 10% of adults own or have owned crypto assets, and these numbers continue to rise.
Charles Randell, former president of the FCA, said: “Speculating crypto is pure and simple gambling.
“It should be regulated and taxed as such, with levies to support the debt counseling and addiction services for which demand will increase.”
The FCA welcomed the report, but said: “People should still be aware that dealing with cryptoassets remains a high risk. When you buy crypto, you have to be prepared to lose your money – it’s unlikely there’s any protection if something goes wrong.”
The watchdog has recently cracked down on a number of other online programs, including get-rich-quick savings and investments promoted by internet celebrities.