The UK Financial Services Minister, Andrew Griffith, rejects the proposal to regulate crypto as gambling, advocating alignment with global standards.
Britain’s Financial Services Minister, Andrew Griffith, has strongly disagreed with suggestions that cryptocurrencies should be regulated as gambling. This recommendation came from the Parliament’s Treasury Select Committee in a report released earlier in May. They suggested that regulation of cryptocurrencies, such as Bitcoin and Ether, as gambling could help mitigate the considerable consumer risks associated with these unbacked assets.
However, Griffith expressed the country’s desire to become a global leader in cryptocurrency and blockchain technology, making it clear that the British government is already formulating rules for the industry.
Financial Services vs Gambling Regulation
The concern of lawmakers is that categorizing cryptocurrencies as a financial service might give consumers a false sense of security. UK regulators have continuously reminded investors of the risk of losing all their funds in cryptocurrency investments.
Still, Griffith emphasised that the finance ministry fundamentally disagreed with the proposition of regulating retail crypto trading and investment as gambling rather than financial service.
Griffith also noted that a gambling regulation system might not successfully mitigate the risks associated with crypto trading, as demonstrated by the recent collapse of the crypto exchange FTX.
Aligning with Global Standards
Griffith underlined the importance of aligning with internationally agreed recommendations by standard-setting global bodies such as the International Organization of Securities Commissions (IOSCO) and the G20 Financial Stability Board (FSB). He argued that treating crypto assets as gambling would clash with these global norms.
Both IOSCO and FSB have proposed sets of rules for the crypto sector, with IOSCO’s being the first of its kind, unveiled in May. The FSB followed with further standards this Monday.
Griffith pointed out that implementing a gambling regulation approach could result in a mismatch with the measures adopted by other major jurisdictions, including the European Union. It could also lead to confusing and overlapping mandates between financial regulators and the Gambling Commission.
The European Union, for instance, has already approved a comprehensive set of rules for cryptoasset trading, due to come into force by mid-2024. Therefore, Griffith made it clear that the UK will aim to harmonise its approach with global and EU standards, rather than regulate crypto as gambling.