The UK Government has responded to the Treasury Committee’s report on Regulating Crypto, announcing its intention to regulate retail trading in unbacked cryptoassets as a financial service. This comes after calls from the cross-party Committee of MPs to classify consumer trading in unbacked crypto as gambling due to its price volatility and risk of losses. The Government’s decision aims to ensure the safety and protection of consumers engaged in crypto trading.
Addressing Concerns and Embracing Potential Benefits
While the Committee raised concerns about the ‘halo’ effect that regulating consumer crypto trading as a financial service may create, the Government argues that such regulation will bring transparency and accountability to the industry. The Government also recognizes the potential benefits of cryptoassets in financial services, particularly for cross-border transactions and payments in less developed countries. It emphasizes the need for regulators to stay updated with technological developments in this space.
“The UK Government aims to ensure the safety and protection of consumers engaged in crypto trading. ”
Impact on the Crypto-Asset Industry and Consumer Protection
Approximately 10 percent of UK adults hold or have held cryptoassets, according to HM Revenue & Customs. The Government’s decision to regulate retail trading in unbacked cryptoassets as a financial service aims to provide a regulatory framework that balances the opportunities and risks associated with cryptocurrencies. The move is expected to have a significant impact on the crypto-asset industry in the UK, potentially facilitating innovation while ensuring consumer protection.
