Robert Steinadler, 11 days ago
Many crypto enthusiasts and the broader crypto industry had high hopes for the UK to become the biggest crypto hub next to Europe. An open and efficient regulatory framework was promised, and it was believed that crypto would soon thrive in the country. A royal NFT mint was one of the many indicators that these plans are more than just make-believe. The expectations for crypto in the UK have changed all of a sudden.
Why is the UK Treasury Committee suggesting treating crypto as gambling?
Yesterday, the UK Treasury Committee released a report on crypto regulation. It discusses various topics, such as the potential of crypto and a digital asset economy, its risks, and the government's approach to specific topics and issues.
The report's summary already paints a grim picture that differs significantly from what we have seen. If we are to believe the committee, then cryptocurrencies hold no intrinsic value, reminding the reader that the previous report in 2018 described the market as the wild west. Accordingly, the current committee has no reason to change that stance.
Instead, it argues that crypto retail trading should be regulated along with gambling. Comparing the market and its digital asset trading with casinos. The committee argues that this regulatory approach would reflect the principle of connecting the same type of risk with the same regulatory outcome.
It is essential to understand that Prime Minister Sunak is still working on a crypto-friendly regulatory environment. New rules and regulations could be rolled by April next year. With this in mind, the report reminds the government and the industry that lawmakers are still negotiating and sometimes fighting over how to approach crypto regulation.
The report is paying testimony to pro-crypto politicians like Sunak are facing resistance. The UK would be well-advised to approach crypto with an open mind. By next year, MiCA will come into full effect in the EU.
Arguably, crypto regulation in the EU could be better, but this is the first consistent framework worldwide. It provides companies and institutional investors with much-needed guidance, which is needed to grow this market further. Should the UK fall behind its European neighbors, the impact could be devastating if crypto creates economic growth on all fronts. Despite the report's harsh language, it is to be expected that the UK's final regulatory approach will be more open.
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