MPs have argued that investing in cryptocurrencies is identical to gambling and should be treated as such.
Because of their erratic values and potential for losses, cryptocurrencies, according to the Treasury Select Committee, present considerable dangers to consumers.
According to a report, customers may assume they are safe and protected when they are not if consumer crypto is regulated as a financial service, as the Government has proposed.
They said that experts have urged for levies to be placed to cryptocurrency speculation in order to assist debt counseling and addiction treatment programs.
According to the paper, stricter regulations might put a stop to investors being mislead by cryptocurrency companies, particularly on social media sites.
According to study by the Bank for International Settlements that was quoted, up to four out of every five investors in Bitcoin between 2015 and 2022 were likely to have lost money.
In 2022, a number of well-known cryptocurrency businesses went under, notably the FTX cryptocurrency exchange.
The Gambling Commission, which offers information and support to people and businesses, including on how to prevent compulsive gambling, and implements measures including anti-money laundering and counter terrorism finance checks, were mentioned by MPs as one way that gambling is regulated.
In accordance with the FCA’s Anti-Money Laundering and Counter Terrorist Finance regulations, 85 percent of applications from cryptoasset enterprises were turned down.
A major portion of the cryptoasset business, according to Treasury Select Committee Chairman Harriet Baldwin, is still in its “wild west” stages.
She said: “Effective regulation is clearly needed to protect consumers from harm, as well as to support productive innovation in the UK’s financial services industry.
“However, with no intrinsic value, huge price volatility and no discernible social good, consumer trading of cryptocurrencies like Bitcoin more closely resembles gambling than a financial service, and should be regulated as such.
“By betting on these unbacked ‘tokens’, consumers should be aware that all their money could be lost.”
MPs criticized the Royal Mint NFT’s release, saying that public funds shouldn’t be utilized to assist cryptoasset activities unless there is a clear, good justification for doing so.
In order to “make the UK a global hub for crypto-asset technology and investment,” the government ordered the Royal Mint to create a “NFT for Britain.”
However, MPs argued that promoting certain technological advancements for their own sake was not the government’s job.
According to HM Revenue & Customs, around 10% of UK individuals currently own or have previously owned crypto assets.