UK Government Proposal: Cryptocurrencies Treated as Gambling

By John Isaac,
Editor at online-gambling.com

John Isaac Editor at online-gambling.com

John Isaac is an editor with many years of experience in the gambling industry. He writes expert articles on card games like blackjack and poker. In addition, he is also well aware of the US gambling laws and the Indian and Dutch gambling markets. You can rely on verified information and insightful details.

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Last updated: May 29, 2023

Cryptocurrencies continue to be a source of conflict throughout the world, with many governments still failing to understand their nature. A recent attempt in the United Kingdom (UK) to regulate digital currencies such as Bitcoin through the UK Gambling Commission (UKGC) demonstrates officials’ lack of knowledge.

Different perspectives on the worth of cryptocurrencies, like traditional money, can cause misunderstanding among policymakers. While the European Union (EU) has established new legislation to give advice on cryptocurrencies, the United States (US) federal government has yet to do so.

House of Commons Treasury Committee Equates Crypto with Gambling

According to the Evening Standard, a group of legislators in the United Kingdom has linked cryptocurrencies to gambling, claiming that they serve “no useful social purpose.” The House of Commons Treasury Committee, which is in charge of supervising financial operations, undertook a research on cryptocurrencies, duplicating a previous study from five years ago.

Based on the findings of the committee, cryptocurrencies have limited real-world utility, acting largely as investing instruments rather than having a larger societal influence. Furthermore, the committee argues that unbacked cryptocurrencies do not have any underlying assets to underpin their value. However, popular currencies such as the US dollar and the British pound are likewise not backed by tangible assets.

The committee claims that investing in cryptocurrency is similar to gambling because of the market volatility of cryptocurrencies such as Bitcoin. As a result, it suggests that the UK government regulate retail trade and investment in unbacked crypto assets as gambling, in accordance with the premise of “same risk, same regulatory outcome.”

If accepted, this method would position the UKGC in charge of overseeing the crypto ecosystem. Cryptocurrency businesses would need to get gaming licenses, follow regulatory laws, and pay associated fees and taxes. While the committee’s proposals allow the UKGC to broaden its authority, it is unclear if the government, which is distracted with other important issues, would accept these conclusions.

CryptoUK Expresses Concerns Over Misunderstanding of Crypto’s Nature

CryptoUK, the UK’s self-regulatory trade organisation for the crypto sector, voiced alarm and dissatisfaction with the committee’s decision. Ian Taylor, KPMG’s head of crypto and digital assets and a CryptoUK advisor, feels the committee misunderstood the fundamental nature, purpose, and potential of the crypto business. He contends that digital assets are a new investment class, not a component of the gaming ecosystem. Taylor argues that customers may engage in speculative activities such as Forex trading and futures trading without their being considered gambling, and the same difference should apply to betting on cryptocurrency values.

While Taylor’s argument has some merit, it is important to remember that cryptocurrencies were designed to be decentralized currencies that might be used as an alternative to government-controlled fiat currencies like the dollar, pound, or euro.

Despite Bitcoin’s 14-year existence, the notion of cryptocurrencies as a currency alternative continues to baffle many people, notably those in government. Various types of currency, such as seashells and early paper dollars, have changed in value and perception over history. Similarly, as more individuals see the worth and potential of certain digital currencies as currency alternatives, the fundamental purpose of cryptocurrencies is likely to be achieved.