The self-regulatory organization CryptoUK and crypto exchange Kraken UK criticized a recent report from a panel of British lawmakers that suggested that crypto should be regulated in a similar vein to gambling.
In a May 17 report, the Treasury Committee “strongly recommended” that unbacked crypto be regulated as gambling due to concerns over “significant” risks to consumers associated with the asset class, such as price volatility and lack of intrinsic value.
This ultimately calls for crypto to be regulated under the principle of “same risk, same regulatory consequences. “
The move did not sit well with local players, especially given that the United Kingdom is thought to be on its way to becoming a progressive crypto hub.
In a May 17 statement shared by Cointelegraph, CryptoUK argued that “taking this approach ignores the nuances of the sector and the real opportunities for inward investment and growth for the UK economy as a whole.” an,” added that:
“No other jurisdiction in the world has taken this approach and targeting MiCA in the EU, we need to develop a deliberate and tailored approach to regulation within the industry to ensure that the UK does not become an adversary environment for businesses to live in.”
The organization also suggested that such an approach could ultimately lead to UK consumers instead looking for offshore crypto platforms to get involved, which it felt was “totally at odds with the objective of protecting it consumers through regulation.”
In Kraken UK’s statement, the company emphasized that it “fundamentally” disagrees with the “Treasury’s conclusion that cryptoassets have no intrinsic value.”
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“It is regrettable that the committee did not support the opportunity for the UK to become a real global leader in our fast-growing industry,” the company said, adding:
“The committee’s proposal that crypto assets should be regulated as gambling products is wrong and completely inappropriate for UK consumers.
It argued that it not only “misses the purpose and potential of the technology,” but noted that gambling protections do not provide the same protections as financial services regulations.
CryptoUK points out a potential loss of capital gains tax if crypto trading is considered gambling.
“Gambling is exempt from capital gains tax. Does the UK government want to exclude tens of millions of pounds in tax revenue from gains made on the purchase and sale of unsupported crypto assets?,” said CryptoUK.
Of course not, but it is very absurd that this is the result of a consultation that is very well attended with written evidence from the people involved.
— laurence (@functi0nZer0) May 17, 2023
The specific extent to which crypto can be regulated “as gambling” is not defined by the Treasury, however, the report recommends the imposition of strong regulation and guidelines related to consumer protections, anti-money laundering, and financing of terrorism.
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