UK Economic Secretary rejects regulating crypto as gambling, advocates for financial services framework
The finance ministry argued that the Committee's recommendation was alien to international standard and approaches to crypto.
Andrew Griffith, U.K’s Economic Secretary to the Treasury, has rejected the Parliament Treasury Select Committee’s recommendation to regulate cryptocurrency trading as gambling, according to a response published on July 20.
In a May report, the U.K’s Treasury Committee acknowledged that blockchain technology could be beneficial to the financial services industry. However, it likened cryptocurrency investing and trading to gambling, recommending that the industry should be regulated as such.
Griffith argued that adopting the Parliament’s Committee recommendation would result in a conflict with international regulators and would not adequately address the risks associated with the industry.
“The Committee’s proposed approach would therefore risk creating misalignment with international standards and approaches from other major jurisdictions including the EU, and potentially create unclear and overlapping mandates between financial regulators and the Gambling Commission.”
The Economic Secretary pointed out that international organizations, including the International Organization of Securities Commissions (IOSCO) and the G20 Financial Stability Board (FSB), have introduced recommendations that adequately address the regulatory risk of the industry. He explained that:
“[The international bodies recommendation are] grounded in the principle of ‘same activity, same risk, same regulatory outcome’, meaning that any cryptoasset activity that performs a similar function, and poses similar risks, to those in the traditional financial system (for example, operating a trading platform or providing custody services) are subject to regulation that ensures equivalent outcomes.”
Griffith further stated that the cryptocurrency industry will benefit more if an appropriate financial services regulatory framework is developed to “address the risks of unbacked crypto assets and [create] the conditions for safe innovation.”
Meanwhile, the government official stated that the authorities were taking proactive measures to combat consumers being misinformed about cryptocurrencies. Griffith noted that the government has a dedicated financial promotions regulatory regime for crypto assets, adding that there are proposals 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 crypto firms and advertisers, urging them to comply with the upcoming financial promotions regime, set to be implemented in the industry by October.