21-7-2023 (LONDON) The U.K. government has rejected a proposal by lawmakers to regulate cryptocurrencies like gambling, citing existing proposals that better address the risks posed by events such as the collapse of FTX, a cryptocurrency exchange. The government’s response was published on Thursday in a document that came in response to a concern raised by the House of Commons’ Treasury Committee in May. The committee had expressed worries that the government’s plans to apply rules similar to those for traditional finance to cryptocurrencies were too soft, creating a false sense of security for investors in cryptocurrencies like bitcoin (BTC) or ether (ETH).
In its response, the Treasury rejected the committee’s recommendation regarding retail cryptocurrency trading and investment, stating that “a system of gambling regulation, in isolation, would be unlikely to address these risk factors.” The government argued that such regulation would not correct problems linked to insider trading and market manipulation that are covered by traditional financial regulation, or the commingling of customer funds alleged by cryptocurrency exchange FTX.
The government also warned that relying on gambling regulation would represent a significant departure from its intended approach, which reflects recommendations from global standard-setting bodies. These recommendations were recently endorsed by finance ministers from the world’s 20 leading economies, as recommended by the Financial Stability Board. The government cautioned that diverging from these global standards would only push cryptocurrencies offshore.
In 2022, Rishi Sunak, who was then the finance minister and is now the prime minister, had expressed the desire to make the U.K. a hub for cryptocurrencies. However, the sector has raised concerns that the U.K.’s rulemaking is lagging behind rival jurisdictions such as the European Union, which have already introduced regulatory frameworks for cryptocurrencies
