The government believes that aligning crypto regulations with gambling would confuse investors and contradict global recommendations.
In the United Kingdom, a recent recommendation by the UK Treasury Committee to oversee the retail trading of cryptocurrencies under the same guidelines as gambling has been turned down by the government.
The suggestion to treat crypto transactions as gambling was part of a committee report presented in the House of Commons on May 17th. The central idea voiced by the Treasury Committee was that if the risk factors are identical, the regulatory outcomes should also align.
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However, this comparison didn't sit well with Andrew Griffith, the UK's financial services minister.
In his response to the committee on July 20th, he strongly disagreed with the recommendation to regulate retail trading and investment activities in non-backed crypto assets as if they were gambling and not a financial service.
The Gaming Act of 2005 governs all gambling forms in the UK, including bingo halls, online bookmakers, casinos, and betting shops. With the regulation, authorities in the UK aim to mitigate compulsive gambling and implement anti-money laundering steps.
The government highlighted the potential drawbacks of such an approach, indicating it could contradict the globally accepted crypto-related recommendations from international organizations and standard-setting bodies.
On top of that, the government expressed concern that the committee's recommendations could cause confusion and overlapping jurisdictions between financial regulators and the Gambling Commission.
When talking about ensuring standards for the crypto industry and crypto firms, the government noted:
HM Treasury and the FCA will work with the industry to ensure crypto firms are made fully aware of the standards required for approval at the FSMA gateway. Further communications will be provided in due course to ensure standards for approval are clearly available to crypto firms operating in the UK.
The government also revealed that the new crypto legislation might be enacted by late 2023.
The UK government remains firm in its stand to distinguish cryptocurrency regulation from gambling, emphasizing the unique nature of each domain and the need for suitable oversight mechanisms.
In other UK-related news, crypto firms and finfluencers may soon be required to include disclaimers on their crypto-related memes to align with the United Kingdom's advertising regulations.
