The British government has rejected the proposal to regulate cryptocurrency trading as a form of gambling.
This decision comes after a group of parliamentarians suggested that crypto trading should be treated similarly to gambling activities.
These lawmakers argued that cryptocurrency resembles gambling due to its lack of intrinsic value and its volatile nature, which can lead to substantial gains or losses for investors. They asserted that crypto trading is more akin to gambling than traditional banking.
However, the government has expressed disagreement with this viewpoint. While acknowledging the risks associated with cryptocurrency, they believe that it should be subject to regulations similar to those governing banking, rather than gambling.
Griffith indicated that the government believes a financial services regulatory structure is a more efficient method to manage the dangers of digital currency transactions.
This strategy contradicts global norms, as incorporating retail crypto transactions under the gambling regulatory structure would breach the suggestions of international organizations like the International Organization of Securities Commissions and the G20 Financial Stability Board.
Consequently, Griffith believes the committee’s strategy could break international standards.
He also mentioned that this would result in overlapping responsibilities between financial regulators and the gambling commission.
Griffith believes that the gambling regulatory structure would not be effective in lessening the risks of cryptocurrency transactions, as issues such as market manipulation, improper lending practices, and failures in financial risk management would not be addressed.
He believes that regulating cryptocurrencies through financial services would ensure steps are taken to mitigate risks to consumers.
Financial regulators are more likely to possess the abilities to effectively regulate the marketplace.
“The Gambling Commission has a strong history in ensuring gambling is safe and fair, in protecting consumers and the general public,” Griffith explained.
“However, regulating financial risks (similar to those that exist in financial markets) is not within the Gambling Commission’s scope or area of expertise.”
## The UK’s Recent Crypto Regulatory Actions
The official emphasized the government’s recent actions in the area. He mentioned the legislation proposed last month, suggesting the creation of a dedicated financial promotion regulatory framework.
“I am eager to continue collaborating with the committee to achieve our objectives, making the UK a leading location for crypto asset technology and investment, supported by clear and strong regulation,” Griffiths stated.
**Should Crypto Trading Be Classified as Gambling?**
The issue of whether emerging products like cryptocurrencies and NFTs should be classified as gambling has been a point of contention for regulators for years.
In May 2022, Andrew Rhodes, head of the UK Gambling Commission, stated that it was challenging for regulators to take action. These products often include gambling features but not enough to be considered purely gambling.
“We often discover that a portion of what is offered by new products crosses the line, but not the entire product,” he explained.
Previously, the UK Gambling Commission had taken action, issuing a warning to consumers in 2021 about the fantasy football NFT game Sorare.
Sorare offers players competitions where they purchase NFTs to create fantasy lineups. However, the game’s paid nature prompted the UK regulator to issue a warning and raised concerns in its native France.
As a result, it launched free competitions in France earlier this year, although it remains under scrutiny by the French National Gambling Authority (ANJ).
The British government panel isn’t the initial political body to suggest that cryptocurrency trading ought to be handled like wagering.
Back in January of 2023, Fabio Panetta, a high-ranking official in the European Central Bank, made the same statement.
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