Britain’s Financial Services Minister, Andrew Griffith, rejected the proposal to classify cryptoassets as a form of gambling, stating it would lead the country to diverge from global and European Union regulators’ stance and not effectively address sector risks. The Parliament’s Treasury Select Committee previously recommended regulating bitcoin, ether, and other “unbacked” cryptocurrencies as gambling due to potential risks to consumers.
Lawmakers expressed concerns that categorising crypto as a financial service might mislead consumers into believing it is safer than it actually is, and UK regulators emphasised the possibility of investors losing their funds. Instead, the country seeks to establish itself as a significant player in the global crypto landscape and is already working on specific rules for the sector.
The finance ministry firmly disagrees with the committee’s recommendation to regulate unbacked cryptoassets as gambling, as Griffith conveyed in response to the committee’s report. He argued that a gambling regulatory approach would not adequately address the risks highlighted by the collapse of the crypto exchange, FTX.
Additionally, such a system would clash with internationally agreed-upon guidelines from prominent standard-setting organizations, including the International Organization of Securities Commissions (IOSCO) and the G20 Financial Stability Board (FSB), which have input from domestic regulators.
In contrast to the committee’s stance, IOSCO has proposed the world’s first set of rules for the crypto sector in May, followed by further standards from the FSB in a recent update.
Griffith warned that adopting the proposed approach could create misalignment with international standards and other major jurisdictions, including the EU, possibly leading to unclear and overlapping mandates between financial regulators and the Gambling Commission.
The EU has already approved comprehensive rules for trading cryptoassets, which will take effect from mid-2024 onwards.
At present, the UK’s Gambling Act does not classify buying or selling cryptocurrencies as gambling, according to a spokesperson from the country’s gambling watchdog. Any changes to the Act would rightfully be a matter for the government to consider.
Looking ahead, Britain plans to establish regulations for stablecoins, a form of cryptocurrency backed by underlying assets and designed to maintain a stable value, distinguishing them from the typically volatile “unbacked” cryptocurrencies.
