According to UK legislators, cryptocurrency investments in the country should be regulated similarly to the gaming sector.
The influential, cross-party Treasury Committee of parliament made the appeal one day after EU ministers decided to impose stricter tax regulations on cryptocurrency transactions.
The absence of regulatory monitoring of the industry, whose most well-known units are bitcoin and ether, is worrying international authorities more and more.
“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,” the Treasury Committee said in a study.
According to the research we have received about customer behavior, “These characteristics more closely resemble gambling than a financial service.”
According to the statement's conclusion, “We therefore strongly recommend that the government regulates retail trading and investment activity in unbacked cryptoassets as gambling rather than as a financial service.”
The value of the global cryptocurrency market reached a high of nearly $3.0 trillion in late 2021, helped by strong demand from small investors during Covid lockdowns, but then plummeted down a cliff and is now just over $1.1 trillion.
A slew of scandals have shaken the sector, which longs to be accepted by conventional finance.
This includes the well-known failures of the cryptocurrency Terra in the middle of 2022 and the exchange FTX in the latter part of the same year.
The hazards presented by “poorly run businesses” in the industry, as well as the growing usage of cryptocurrency by fraudsters and other criminals, were both mentioned by the Treasury Committee on Wednesday.
In order to keep up with the EU and the US, Prime Minister Rishi Sunak's Conservative administration in Britain is working to create a legal framework for cryptocurrencies.
The committee report on Wednesday noted that “it is not the government's role to promote particular technological innovations for their own sake.”
It also criticized the failed British initiative to issue non-fungible tokens (NFTs), or electronic tokens built on the blockchain. In April 2022, Sunak announced the project while serving as finance minister.
The committee did applaud UK measures for tighter regulation of institutional cryptocurrency investors.
Cryptocurrencies might also be used “to increase efficiency and lower the cost of sending payments,” it was stated.
In the meanwhile, the European Union strengthened its investor protection measures this week.
On Tuesday, EU finance ministers reached an agreement on guidelines for pursuing those who hide their money in places where tax officials have no control.
The 27-member bloc's parliament enacted the first set of thorough regulations governing crypto assets last month.