UK lawmakers may or may not know how the cryptocurrency industry works.
The recommendation comes as regulators become increasingly vocal about the substantial risks these digital assets could pose to consumers.
Members of Parliament are worried that treating consumer crypto trading as a financial service could mislead consumers into thinking that the activity is safe and protected. The cross-party committee argues that the nature of such trading more closely aligns with gambling and should be regulated accordingly.
“Despite the regulatory framework, the inherent price instability and lack of intrinsic value of non-backed crypto-assets will always represent considerable risks to consumers,” a report from the Treasury Committee stated.
Bitget managing director Gracy Chen told Benzinga that the Seychelles-based crypto exchange believes in the potential of cryptocurrency to drive financial innovation and economic growth. It urged collaboration between the government and the industry to shape a regulatory environment that safeguards consumers, combats illicit activities, fosters innovation, and promotes the sustainable growth of the cryptocurrency industry.
“Bitget is committed to embracing regulation and implementing a comprehensive set of stringent risk control and anti-money laundering policies and procedures,” she said.
It goes on to assert that consumer speculation in non-backed crypto-assets is more akin to gambling than a financial service.
With the surge in popularity of cryptocurrencies such as Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) during the pandemic, the number of DIY investors participating in cryptocurrency trading has increased significantly.
HM Revenue and Customs (HMRC) data indicates that around 6 million UK residents own or have owned crypto-assets.
Harriet Baldwin MP, chair of the committee, expressed her concern about the hazards posed by the largely unregulated cryptocurrency industry.
“The events of 2022 have shed light on the risks consumers face in the crypto-asset sector, a substantial portion of which remains unregulated,” she stated. “There is a pressing need for effective regulation to safeguard consumers and encourage valuable innovation in the UK’s financial services sector.”
The committee also recommended that the government adopt a balanced approach to developing crypto-asset technologies and refrain from investing public resources in crypto-asset activities without a clear, beneficial use case.
Plans for a digital ‘Britcoin’, a central bank-backed digital pound issued by the Bank of England, remain on the table, despite the government’s decision to abandon its plans to produce a non-fungible token through the Royal Mint.
Regulations in the crypto have been sought out in the U.S. as the collapse of FTX came to light that was the downfall of the bitcoin mogul, Sam Bankman-Fried.
Bankman-Fried was extradited to the U.S. from the Bahamas where FTX had its headquarters. He is currently facing thirteen counts include charges of securities fraud, wire fraud and campaign finance violations. The former FTX was accused of obscuring bank accounts linked between the company and Alameda.
Produced in association with Benzinga