MPs on the UK Treasury Select Committee chaired by Harriett Baldwin MP called out for cryptocurrency to be regulated in a similar way to gaming. Digital assets have “no intrinsic value” they stated. The consensus was that crypto trading is a high risk investment. During the Treasury Committee, concern was expressed about the volatile industry which, in their opinion, requires to be regulated “in the same way as gambling.”
The events of 2022 have highlighted the risks posed to consumers by the cryptoasset industry, large parts of which remain a wild west. With no intrinsic value, huge price volatility and no discernible social good, consumer trading of cryptocurrencies like Bitcoin more closely resembles gambling than a financial service, and should be regulated as such.” Harriet Baldwin MP – Treasury Committee Chair
MPs from all UK political parties participated in the group and unanimously agreed that the crypto industry must be legalised.
One in 10 UK adults holds crypto assets
The Treasury Committee discussed why digital assets pose significant risks to consumers because they believe that crypto trading is like betting rather than a regular financial service. Consumers must not only be aware about the price volatility but they need to understand that legitimising the market does not mean that crypto is safe. They added that consumers are not protected as the market stands currently.
The UK HM Revenues and Customs estimates that one in 10 UK adults now holds digital assets.
However industry leaders defended the sector. Ivan Ivanchenko, CEO of Phinom Digital, a crypto options trading platform said “Treating cryptocurrency trading as gambling would be a backward step for the UK’s digital currency aspirations and another demonstration that the country is fast becoming a sea of red-tape.”
Acknowledgement of importance of new technology
A report presented at the Committee acknowledges the necessity and potential of new technologies that drive the cryptocurrency market to integrate with the financial services industry. Recommendations were made for the Government and regulators to work hand-in-hand with all stakeholders and keep abreast with developments in the industry going forward.
Our research shows that interest in digital assets continues to rise at pace, particularly with young investors. Almost half (47 percent) of respondents in our latest Wealth Index survey reported that they hold at least some digital assets, up from a third six months ago, while among those aged under 24, the number is almost two thirds (65 percent).” Mike Stimpson, Financial Advisor – Saltus
Stimpson added that the crypto sector is extremely volatile but that there were advantages and disadvantages. “It is very difficult to work out a fair value for crypto currencies. This, combined with the immaturity of the sector and the lack of regulation, means there is significant risk for investors. As with any investment, crypto investors need to take advice. A professional advisor will be able to help them build a financial plan which invests in a diversified portfolio to generate the returns necessary to deliver that plan,” he explained.
European Parliament gave ‘green light’ to MiCA bill
EU Parliament expects the “Markets in Crypto Assets” law to come into force next year. MiCA will protect investors and safeguard against financial crime and market volatility. The law will bring digital assets into regulation in the same way as traditional financial services.
When she served as Economic Secretary a few years ago, Harriet Baldwin said ‘Our ambition is now to be the leading FinTech centre in the world‘.
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