CryptoUK, a trade body based in the United Kingdom, argued that a much more nuanced and tailored approach needs to be taken into consideration.
Self-regulatory organization CryptoUK and crypto exchange Kraken UK has slammed a recent report from a panel of British lawmakers that suggested 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 the “significant” consumer risks associated with the asset class, such as price volatility and lack of intrinsic value.
It ultimately called for crypto to be regulated under the principle of “same risk, same regulatory outcome.”
The move has not gone down well with local players, especially given that the United Kingdom is thought to be heading toward becoming a progressive crypto hub.
In a May 17 statement shared with Cointelegraph, CryptoUK argued that “taking this approach will not take into account the nuances of the sector and the real opportunities for inward investment and growth for the UK economy as a whole,” adding 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.”
The organization also suggested that such an approach may ultimately lead to U.K. consumers instead looking for offshore crypto platforms to engage with, which it feels is “ wholly against the objective of protecting these consumers through regulation.”
In Kraken UK’s statement, the firm emphasized that it “fundamentally” disagrees with the Treasury’s “conclusion that cryptoassets have no intrinsic value.”
“It’s regrettable the committee does not support the opportunity the UK has to be a true global leader in our rapidly developing industry,” the firm said, adding:
“The committee’s suggestion that crypto assets should be regulated as gambling products is misguided and wholly unsuitable for UK consumers.
It argued that not only does it “miss the purpose and potential of the technology,” but noted that gambling protections don’t offer the same safeguards as financial services regulations.
CryptoUK pointed to a potential loss of capital gains tax should crypto trading be regarded as gambling.
“Gambling is exempt from capital gains tax. Does the UK government wish to exclude tens of millions of pounds in tax income from gains made by the buying and selling of unbacked crypto assets?,” CryptoUK stated.
The specific extent to which crypto would be regulated “as gambling” has not been defined by the Treasury, however, the report recommended imposing strong regulation and guidelines relating to consumer protections, anti-money laundering, and terrorism financing.