The U.K. Treasury Select Committee takes a dim view of crypto
A committee of MPs has recommended the U.K. government regulates cryptocurrencies in the same way as gambling.
The report from the Treasury Select Committee – a cross-party group of politicians – claims the crypto industry is a “wild west” that serves “no useful social purpose, while consuming large amounts of energy and [is] being used by criminals in scams, fraud and money laundering”.
The committee goes on to claim that “unbacked cryptoassets pose significant risks to consumers, given their significant price volatility and associated risk of losses”.
The report does concede there are some upsides to cryptocurrencies, not least in easing cross-border payments and in “lower-income countries with less developed financial sectors”.
However, it recommends the U.K. government apply similar rules to the crypto market as it does gambling, to help protect consumers from steep losses.
“Consumer speculation in unbacked cryptoassets such as Bitcoin and Ether is one area where we have particular concerns, and think the government needs to take a different approach in order to better protect consumers from harm,” the report states.
“Unbacked cryptoassets have no intrinsic value, and their price volatility exposes consumers to the potential for substantial gains or losses, while serving no useful social purpose.”
“We therefore strongly recommend that the government regulates retail trading and investment activity in unbacked cryptoassets as gambling rather than as a financial service, consistent with its stated principle of ‘same risk, same regulatory outcome’.”
The Treasury Select Committee is appointed by the House of Commons to examine the expenditure, administration and policy of the U.K. treasury, but it doesn’t have the power to set government policy.
NFT rebuke
The committee’s report also takes a swipe at the U.K. government’s previously announced plans to mint its own NFTs, which were hastily dropped earlier this year.
The committee says the government should “avoid expending public resources on supporting cryptoasset activities without a clear, beneficial use case. The government’s recent foray into seeking (and subsequently abandoning) the production of a Royal Mint non-fungible token (NFT) is a case in point. It is not the government’s role to promote particular technological innovations for their own sake.”
The U.K. government has had a hot-and-cold relationship with cryptocurrencies in recent times. In 2022, the then Chancellor of the Exchequer, Rishi Sunak, said that “we want to see the [cryptocurrency] businesses of tomorrow – and the jobs they create – here in the U.K.”, and announced plans to “make the U.K. a global cryptoasset technology hub”.
Since becoming Prime Minister in October, Sunak has since gone cold on crypto, dropping the plans for Royal Mint-backed NFTs and barely mentioning any crypto-related activity since.
Sunak is perhaps wary of publicly backing any financial products that may be regarded as volatile given the circumstances in which he became U.K. Prime Minister. Sunak took over from Liz Truss, who set the record for the shortest reign of any U.K. Prime Minister at only 49 days. She was widely regarded to have crashed the U.K. economy after announcing a tax-cutting budget that led to a rapid devaluation of the pound and turmoil in the financial markets.
