The House of Commons Treasury Select Committee, composed of 11 Members of Parliament, proposed treating cryptocurrencies as gambling in their recent recommendation. Their reasoning behind this suggestion was that cryptocurrencies lack intrinsic value and exhibit significant price volatility. However, this proposal faced immediate opposition from the industry and has since been contested by other legislators.
There seems to be a divergence of opinions among U.K. legislators regarding the appropriate treatment of cryptocurrencies by the country’s regulatory bodies. While a group asserts that crypto shares similarities with gambling, there are others who endorse the government’s initiatives to incorporate digital assets within the existing framework of financial services regulation.
There seems to be a divergence of opinions among U.K. legislators regarding the appropriate treatment of cryptocurrencies by the country’s regulatory bodies. While a group asserts that crypto shares similarities with gambling, there are others who endorse the government’s initiatives to incorporate digital assets within the existing framework of financial services regulation.
According to the report, the All Party Parliamentary Group (APPG) aligns itself with HM Treasury’s stance that cryptocurrency and digital assets should be regulated within the existing and new financial services regulations to the extent that is feasible and suitable. The report highlights the track record of these regulations in mitigating risks for consumers and investors.
During the event held to commemorate the release of the APPG crypto report on Monday, Chair Lisa Cameron provided the rationale behind the group’s support for the government’s stance on classifying cryptocurrencies as financial services. One significant motive cited by Cameron was the imperative of ensuring tax collection from individuals when they generate profits in the United Kingdom. Cameron emphasized the importance of harnessing this tax revenue, which can only be effectively achieved through the framework of financial services regulation rather than categorizing cryptocurrencies as gambling.
According to Diego Ballon Ossio, a partner at law firm Clifford Chance’s London office, gambling winnings are typically not subject to taxation, while investment gains usually are. Another rationale presented by Lisa Cameron is that treating cryptocurrencies as financial services ensures alignment between the United Kingdom and other jurisdictions in terms of their regulatory frameworks for financial services.
Cameron emphasized that the financial services regulations in the United Kingdom provide the highest level of protection available for domestic consumers. The U.K. government has expressed its intention to introduce dedicated regulations for cryptocurrencies in a gradual manner. The initial phase involves the enactment of the Financial Services and Markets Bill, which will grant expanded authority to multiple regulatory bodies for overseeing the crypto sector.