Crypto UK and Kraken UK, a cryptocurrency exchange, have strongly criticized a recent report by a panel of British lawmakers, which recommended regulating crypto in a manner akin to gambling. The self-regulatory organization, a United Kingdom-based trade body, contended that a comprehensive and customized approach should be considered instead.
Treasury Committee Calls for Regulation of Unbacked Cryptocurrencies
In a report released on May 17, the Treasury Committee made a “strong recommendation” for regulating unbacked cryptocurrencies as gambling. The committee expressed concerns about the “significant” risks to consumers associated with this asset class, including price volatility and the absence of intrinsic value.
Advocating for the principle of “same risk, same regulatory outcome,” the recommendation to regulate cryptocurrencies has received a negative response from local stakeholders, particularly considering the United Kingdom’s anticipated trajectory as a forward-thinking crypto hub.
Coin Bureau tweeted:
“ Dear old Blighty seems to be taking one step forward and two steps back when it comes to crypto at the moment. @RishiSunak – the UK can’t become a ‘crypto hub’ if we’re still at the ‘Bitcoin-has-no-inrinsic=value’ stage “
CryptoUK Opposes Simplistic Regulation Approach, Highlights Economic Potential
In a statement provided to Cointelegraph on May 17, CryptoUK expressed the view that “adopting this approach would overlook the intricacies of the sector and the genuine prospects for attracting investment and fostering overall economic growth in the UK.” The organization further emphasized that:
“No other global jurisdiction has taken this approach and referencing MiCA in the EU, we need to be taking a bespoke and tailored approach for regulation within the industry to ensure the UK does not become a hostile environment for businesses to be domiciled.”
Additionally, the organization put forward the notion that adopting such an approach could potentially drive UK consumers towards offshore crypto platforms, a situation that, in its opinion, directly contradicts the objective of safeguarding consumers through regulation.
Kraken UK Challenges Treasury’s Assertion on Intrinsic Value of Cryptoassets
Kraken UK, in its statement, stressed its fundamental disagreement with the Treasury’s assertion that crypto assets lack intrinsic value.
The firm expressed its disappointment that the committee does not recognize the potential for the UK to become a genuine global leader in the rapidly evolving industry. It further stated:
“The committee’s suggestion that crypto assets should be regulated as gambling products is misguided and wholly unsuitable for UK consumers.”
The firm contended that the committee not only failed to grasp the purpose and potential of the technology but also highlighted that gambling regulations do not provide the same level of safeguards as financial services regulations.
CryptoUK Raises Concerns Over Potential Loss of Capital Gains Tax
CryptoUK highlighted the potential impact on capital gains tax if crypto trading were to be classified as gambling. It stated, “By exempting gambling from capital gains tax, is the UK government willing to forgo the tax revenue generated from substantial gains in the buying and selling of unbacked crypto assets, potentially amounting to tens of millions of pounds?”
While the Treasury has not provided a precise definition of how crypto would be regulated under the “gambling” framework, the report suggested the implementation of robust regulations and guidelines pertaining to consumer protections, anti-money laundering measures, and preventing terrorism financing.
In conclusion, the recent report by the Treasury Committee recommending the regulation of cryptocurrencies as gambling has drawn strong criticism from CryptoUK and Kraken UK. Both entities argue that such an approach fails to consider the nuances of the crypto industry and the potential for economic growth in the UK. They emphasize the intrinsic value of crypto assets and raise concerns about consumer protection and the potential loss of tax revenue.
The debate highlights the need for a balanced regulatory framework that acknowledges the unique characteristics of cryptocurrencies while ensuring robust safeguards and fostering innovation in the rapidly evolving industry.