The UK Treasury Committee recently proposed that unbacked cryptocurrencies should be regulated like gambling. However, the UK government, led by Financial Services Minister Andrew Griffith, firmly disagreed with this recommendation. This article explores the reasons behind the UK government’s stance and the benefits of regulating cryptocurrencies as financial services.
Benefits of Regulating Cryptocurrencies as Financial Services
The UK government believes that treating cryptocurrencies as a form of gambling could fail to mitigate many critical risks. For instance, a gambling regulatory framework might not address issues like the commingling of customer assets, market manipulation, inadequate prudential arrangements, and deficiencies in core financial risk management practices.
Safe Innovation and Improved Efficiencies
The government further argues that a financial services regulatory framework is more appropriate for addressing the risks of unbacked crypto assets and creating the conditions for safe innovation. They are already working to regulate the crypto market, and a proposed regulatory legislation was laid with the parliament. This legislation may come into force by the end of this year.
Features of Cryptocurrencies as Financial Instruments
Global Recommendations and Standards
The UK government’s stance aligns with globally agreed recommendations from international organizations and standard-setting bodies, including the International Organization of Securities Commissions and the G20 Financial Stability Board.
UK’s Ambitions as a Crypto Hub
The UK government’s approach aligns with its ambitions to become a global crypto hub, a goal proposed last year by Rishi Sunak, then finance minister and now prime minister. The government welcomes a balanced approach toward supporting new innovation, including crypto asset technologies.
Financial Market Infrastructure (FMI) Sandboxes
The government is also planning to establish Financial Market Infrastructure (FMI) sandboxes for companies to experiment with blockchain technology, thus making the market more efficient, resilient, and transparent.
The UK government strongly disagrees with the recommendation to regulate cryptocurrencies as gambling. Instead, they believe that a financial services regulatory framework is more appropriate for addressing the risks of unbacked crypto assets and creating the conditions for safe innovation. With proposed legislation and future developments in the crypto market regulation, the UK aims to become a leading hub for cryptocurrencies.
For more information on the UK’s stance on cryptocurrency regulation, visit whalecointalk.com/news. For further details on the UK Treasury Committee’s recommendations, check out their official document.
