In its Tuesday report, the Treasury Select Committee said the heightened volatility and potential to lose huge sums of money mean that cryptocurrencies pose significant risks to consumers, the committee said.<\/em><\/p>\n\n\n\n Nothing we have heard in our current inquiry has changed that impression,<\/p>\nThe Committee said.<\/cite><\/blockquote>\n\n\n\n The report said that though there may be some benefits of certain types of cryptocurrencies and more generally in blockchain technology, it points out that the market was at this time dominated by \u201cconsumer speculation in unbacked cryptoassets such as Bitcoin and Ether\u201d.<\/p>\n\n\n\n \u201cThese characteristics more closely resemble gambling than a financial service, an impression reinforced by the evidence we have received of consumer behaviour,\u201d the Committee said.<\/p>\n\n\n \u201cUnbacked 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.”<\/p>\n\n\n\n Even though many have called for cryptocurrencies to be regulated by City watchdog the Financial Conduct Authority, the Treasury Committee cautioned that this could create a \u201chalo effect\u201d, where people undertake that these currencies must have an air of legitimacy about them since they are regulated together with traditional financial products.<\/p>\n\n\n\n \u201cWe therefore strongly recommend that the Government regulates retail trading and investment activity in unbacked cryptoassets as gambling rather than as a financial service, consistent with its stated principle of \u2018same risk, same regulatory outcome\u2019,\u201d the Committee said.<\/p>\n\n\n\n This would mean the Gambling Commission would be put in charge of cryptocurrency regulation, and trading firms would have to apply for gambling licenses. Crypto firms\u2019 revenues would prospectively also be subject to betting responsibilities under this proposal.<\/p>\n\n\n\n Around 10% of U.K. adults hold or have held cryptocurrencies, according to British tax agency HM Revenue & Customs. In April, a top U.K. government official told CNBC<\/a><\/strong> that he expected to see specific regulation for crypto in the U.K. in the next 12 months.<\/p>\n\n\n\n Nevertheless, the cryptocurrency industry body CryptoUK clearly disagreed with the MPs.<\/span><\/p>\n\n\n\n Ian Taylor, the board advisor at CryptoUK, said: \u201cCryptoUK strongly disagrees with the Treasury Committee\u2019s conclusion, and we are both concerned and disappointed by these claims which are unhelpful, false, fundamentally flawed, and unsubstantiated. The statement fails to reflect the true nature, purpose, and potential of the crypto industry.<\/p>\n\n\n\n \u201cProfessional investment managers see Bitcoin and other cryptoassets as a new alternative investment class \u2013 not as a form of gambling \u2013 and institutional adoption of unbacked crypto assets has increased significantly.”<\/p>\n\n\n\n \u201cFurthermore, gambling is exempt from capital gains tax. Does the Government really wish to exclude tens of millions of pounds in tax income from gains made by the buying and selling of unbacked crypto assets?\u201d<\/p>\n\n\n\n Among the Committee\u2019s conclusions were that three-quarters of investors in Bitcoin from 2015-2022 lost money, which it said proved the market was \u201csustained by new entrants\u201d, while early investors and insiders \u201ccash out at their expense\u201d.<\/p>\n\n\n\n\n
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