UK Economy Secretary Rejects Cryptocurrency as Gambling, Advocates Framework for Financial Services

According to the Ministry of Finance, the committee’s proposal does not comply with international standards and approaches to cryptocurrencies.

Andrew Griffith, the U.K. treasury's economic secretary, rejected a proposal by a parliamentary Treasury select committee to regulate cryptocurrency trading as gambling, according to a response published on July 20.

In a report in May, a UK Treasury committee acknowledged that blockchain technology could benefit the financial services industry. However, it likened cryptocurrency investing and trading to gambling, suggesting regulation of the industry.

Griffiths believes that adopting the parliamentary committee's recommendations would lead to conflicts with international regulators and fail to adequately address the risks associated with the industry.

"As such, the Commission's proposed approach may be inconsistent with international standards and approaches in other major jurisdictions, including the EU, and may create ambiguity and overlapping mandates between the financial regulator and the Gambling Commission."

The economy minister noted that international organizations including the International Organization of Securities Commissions (IOSCO) and the G20 Financial Stability Board (FSB) have made recommendations to adequately address regulatory risks in the sector.

He explained: “The international body’s recommendations] are based on the principle of ‘same activity, same risk, same regulatory outcome’, which means that any cryptoasset activity that performs similar functions and poses similar risks to cryptoasset activities in the traditional financial system (for example, operating a trading platform or providing custody services) should be regulated to ensure the same outcome.”

Griffiths further stated that the cryptocurrency industry would benefit more if an appropriate financial services regulatory framework is in place to “address the risks of unbacked crypto assets and create the conditions for security innovation.”

Meanwhile, the government official said authorities are taking aggressive steps to combat consumers being misled about cryptocurrencies. Griffiths noted that the government has a dedicated regulatory regime for financial promotions of crypto assets, adding that there are recommendations “to ensure consumers have access to accurate information when making investment decisions.”

Earlier this month, the U.K.’s Financial Conduct Authority (FCA) issued a warning to cryptocurrency firms and advertisers, urging them to comply with a financial promotion regime set to be introduced in the industry in October.