Just recently, UK Members of Parliament (MPs) have started calling retail investment in cryptocurrencies, such as Bitcoin, gambling. To be more specific, MPs of the UK are suggesting investors classify crypto as gambling due to its highly volatile nature. This suggestion has stirred controversy amongst the crypto community. The Treasury Select Committee, after its thorough analysis, noted that the extreme fluctuations in the value of these cryptocurrencies bear a stark resemblance to gambling. As such, cryptocurrencies “pose” a significant risk to consumers who could potentially lose their entire investment.
While cryptocurrencies and the overall crypto market are very volatile, we must note that even well-established companies and banks throughout the world experienced volatility this year. This is mainly because of the current state of the global economy.
The Committee also voiced disappointment over the now-canceled plans for the Royal Mint to issue a non-fungible token (NFT). If you didn’t know, the UK was planning to issue the so-called Royal Mint to promote the United Kingdom as a crypto hub internationally. However, these plans have been canceled for the time being.
The Treasury Department countered the MPs’ stance, arguing that the risks associated with crypto were similar to those in conventional financial services. It went on to argue that this would mean necessitating financial services regulation over gambling regulation on crypto.
CryptoUK Opposed MPs Comments On Crypto
The MPs’ observations met with fierce opposition from the trade association CryptoUK. The latter criticized the findings as “unhelpful, false, fundamentally flawed, and unsubstantiated.
“The Committee, however, maintained its standpoint, claiming that “unbacked” crypto assets, without any fixed value, expose consumers to potentially hefty gains or losses, thereby serving “no useful social purpose.”
Concerns about potential gambling-related issues connected to cryptocurrency investments have always been present. Now, however, the trend seems to be following an ascending pattern. GamCare, a gambling helpline charity, reported receiving calls from over 300 individuals in the past two years. All these calls were from individuals struggling with cryptocurrency investment addiction and other online financial market challenges. Nevertheless, this does not necessarily mean that investing in crypto is the same as gambling. This is because crypto investing is the same as stock investing.
The Committee’s report highlighted that 40% of new Bitcoin users were men under 35, a demographic often associated with high-risk behavior. Nevertheless, this could also be seen as a misinterpretation of data.
Experts In The Field Supporting The MPs
Castle Craig, a rehab clinic, introduced us to a former gambling addict who had suffered huge losses because of his crypto investments. He shared that he “mistook” his crypto dealings for investments, not gambling. According to the clinic, this resulted in significant financial loss and emotional distress. The clinic supported the Committee’s approach because of this case. Moreover, it emphasized the risks associated with cryptocurrency investments.
Tracey Crouch, former sports minister and gambling campaigner, applauded the report. Moreover, Crouch highlights the need for regulating the current ‘Wild West’ state of the crypto industry. She opined that the Gambling Commission could help bring some semblance of order into this risky and often dangerous area. However, though, most of the crypto community believes that crypto should be regulated adequately as a separate industry, not under the gambling industry umbrella.
Cryptocurrency Investing Is Fun Investing
The report implies that gambling regulations should be applied to crypto. Nevertheless, Harriett Baldwin, chairwoman of the committee, repeated the need to treat speculative cryptocurrency purchases as gambling, not the whole market. The report warned against creating a false sense of security by regulating cryptocurrencies as financial services.
🚨 Published today 🚨
🪙 We’ve just published our report on cryptoassets, setting out our recommendations for the Government’s approach to regulating this market.
— Treasury Committee (@CommonsTreasury) May 16, 2023
This is because regulating this so-called “gambling” industry might mislead consumers. However, cryptocurrencies are and will always be something different from gambling. Cryptocurrencies have implications of being a more fun investment, but they are not gambling in any way or form. The main reason why the crypto industry is prone to manipulation and scammers are the lack of regulations. Other than that, the crypto market is just as safe as any other market. Of course, always do your own research and invest what you can afford to lose since cryptocurrencies are known for their volatility.