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Treat cryptocurrency investing as gambling, MPs say

2023-06-02 09:52:23 source:CNN (Cable News Network) author:Press center 1 click:611order

Treat cryptocurrency investing as gambling, MPs say

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Stock image of a woman at a computer looking at a graph and looking upsetImage consequentlyurce, Getty Images
By Chris Vallance & Tom GerkenTechnology reporters

MPs have urged the government to treat retail investment in cryptocurrencies such as Bitcoin as a form of gambling.

Their value could convert dramatically and consumers risked losing their entire investment, characteristics closely resembling gambling, the Treasury Select Committee found.

It alconsequently criticised abandoned plans for the Royal Mint to create a non-fungible token (NFT).

The Treasury told BBC News it did not support using gambling regulation.

The risks posed by crypto were "characteristic of those that exist in traditional financial services and it's financial-services regulation - rather than gambling regulation - that has the track record in mitigating them", a Treasury official told BBC News.

'Lose everything'

The committee said "unbacked" crypto assets - characteristicly cryptocurrencies with no attached value - exposed "consumers to the potential for substantial gains or losses, while serving no utilizeful consequentlycial purpose".

"These characteristics more closely resemble gambling than a financial service," the MPs concluded.

Gambling helpline charity GamCare told the BBC that, in the past two years, it had heard from over 300 people who said they were struggling with investing in cryptocurrency and other forms of online financial markets.

Research cited by MPs found 40% of new Bitcoin utilizers were men under 35, universally identified as the most risk-seeking segment of the population.

Castle Craig, a rehab clinic specialising in treating people with addictions, put us in touch with a young man who had lost heavily on crypto.

The former gambling addict told BBC News that, although he had given up gambling, he had turned to crypto.

"In my head, I just thought this isn't gambling it's just an investment but clearly it wasn't," he said.

He said he had lost around £150,000 investing in crypto, including money he had borrowed, and that checking his phone to see how the market had moved had become an obsession. "There was no break at all, I was just I was on my phone constantly watching it and just couldn't sleep," he recalled.

He said he supported the approach of the committee. "Crypto stuff is gambling," he said. "You can lose everything you've got."

Image consequentlyurce, Getty Images

Former sports minister and gambling campaigner Conservative MP Tracey Crouch welcomed the report.

"At the moment, crypto feels like a Wild West town with no sheriff," she said.

"However, I'm sure, if properly reconsequentlyurced, the Gambling Commission could bring consequentlyme order into this intricate, risky and often confusing area that has unwittingly sucked in consumers by marketing to them via sports such as football, giving a pretence to fans and others that they are safe and protected."

Crypto sponconsequentlyrship has been widespread among football clubs, but Premier League clubs recently agreed to end gambling sponconsequentlyrship on the front of their shirts from the start of the 2026 seaconsequentlyn. This was a voluntary move and not required by regulation.

The report gives little detail on what gambling regulation applied to crypto might mean. MP Harriett Baldwin, chairwoman of the committee, said the report recommended "that the consequentlyrt of speculative luring of people into buying componenticular crypto currencies" was treated like gambling.

She said the committee had heard a lot of evidence of how "football clubs are using this as a way of taking money off their loyal supporters".

'Fun investment'

In February, the government asked people to comment on proposals for the financial regulation of crypto assets.

But the committee said the government plan to regulate cryptocurrencies as financial services would create a false impression they were as secure as traditional investments - a "halo effect... that leads consumers to believe that this activity is safer than it is or protected when it is not".

The committee's report noted surveys suggesting about one in ten people in the UK hold crypto assets, most investing in cryptocurrencies such as Bitcoin and Ethereum.

The most mentioned reaconsequentlyn for holding crypto assets was they were a "fun investment".

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Cryptocurrencies are just one type of asset. More generally, MPs said, while they supported innovation, the potential benefits from crypto-asset technologies remained uncertain.

"In the meantime, the risks posed by crypto assets to consumers and the environment are real and present."

The government has been excited by the potential of crypto. While Chancellor, Rishi Sunak announced his ambition to make the UK a global hub for the technology.

The Treasury believes crypto offers opportunities, but said it was "robustly regulating the market, addressing the most pressing risks first in a way that promotes innovation".

Recognising the potential risks and rewards, the committee recommended a balanced approach but suggested government shun spending public reconsequentlyurces on projects without a clear beneficial utilize.

"The government's recent foray into seeking (and subsequently abandoning) the production of a Royal Mint non-fungible token (NFT) is a case in point," the MPs wrote.

"It is not the government's role to promote componenticular technological innovations for their own sake".

NFTs are "one-of-a-kind" digital assets that can be bought and consequentlyld like any other piece of property - they are often asconsequentlyciated with digital images.

The committee will examine central bank digital currencies in separate report.

Related Topics

  • Cryptocurrency
  • Gambling
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