Andrew Griffith, the UK Chancellor of the Exchequer, has rejected the recommendation of Parliament’s Treasury Select Committee to regulate cryptocurrency trading as gambling, according to a response published July 20.
In a May report, the UK Treasury Committee acknowledged that blockchain technology could be beneficial to the financial services industry. However, it compared investing and trading cryptocurrency to gambling, recommending that the industry be regulated as such.
Griffith argued that adopting the Parliament’s committee recommendation would create a conflict with international regulators and would not adequately address the risks associated with the sector.
“The Commission’s proposed approach would therefore risk misalignment with international standards and approaches from other major jurisdictions, including the EU, and potentially create unclear and overlapping mandates between financial regulators and the Gaming Commission.”
The Minister of Economic Affairs pointed out that international organizations, including the International Organization of Securities Commissions (IOSCO) and the G20 Financial Stability Board (FSB), have issued recommendations that adequately address the regulatory risk of the sector. He explained that:
“[The international bodies recommendation are] based on the principle of ‘same activity, same risk, same regulatory outcome’, meaning that any crypto-asset activity that performs a similar function and poses similar risks to those in the traditional financial system (e.g. operating a trading platform or providing custody services) is subject to regulation that ensures equivalent outcomes.
Griffith further stated that the cryptocurrency industry will benefit more if an appropriate financial services regulatory framework is developed to “address the risks of unsupported crypto assets and [create] the conditions for safe innovation.”
Meanwhile, the government official stated that authorities were taking proactive measures to prevent consumers from being misinformed about cryptocurrencies. Griffith noted that the government has a specific financial promotion regulatory regime for crypto-assets, adding that there are proposals to “ensure that consumers have access to accurate information when making investment decisions.”
Earlier this month, the UK’s Financial Conduct Authority (FCA) issued a warning to crypto firms and advertisers, urging them to adhere to the upcoming financial promotions regime, which is expected to be implemented in the industry in October.
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