Global: UK Rejects Treating Crypto as Gambling, Pursues Global Hub for Crypto Industry

Britain’s Financial Services Minister, Andrew Griffith, firmly rejects the recommendation to regulate cryptoassets as gambling, emphasizing the country’s ambition to become a global hub for cryptocurrencies and blockchain technology.

In May, Parliament’s Treasury Select Committee proposed that “unbacked” cryptocurrencies like bitcoin and ether should be treated as gambling due to the significant risks they pose to consumers. However, the finance ministry believes this approach would not effectively mitigate the risks and may mislead investors about the safety of crypto investments.

Instead, Britain is working on comprehensive rules for the crypto sector to ensure its responsible development and to align with globally agreed recommendations from organizations such as the International Organization of Securities Commissions (IOSCO) and the G20 Financial Stability Board (FSB).

Griffith highlighted that adopting a gambling regulation system for crypto would create misalignment with international standards and approaches, including those set by the European Union. The EU has already approved its comprehensive set of rules for trading cryptoassets, set to be implemented from mid-2024.

The distinction between crypto trading and gambling is crucial, as treating cryptocurrencies as a financial service would not provide adequate investor protection, leading regulators to warn consumers about the potential risks of cryptocurrency investments.

While the UK’s Gambling Act currently does not classify buying or selling cryptocurrencies as gambling, the government has the authority to make changes if necessary. Regulators are actively exploring the dynamics of crypto-related activities, such as investigating a Softbank-backed fantasy sports company, Sorare, to determine if its use of cryptocurrency amounts to gambling.

In addition to addressing cryptoassets, Britain is also developing regulations for stablecoins, a form of cryptocurrency backed by underlying assets to maintain a stable value. These efforts are part of the country’s broader strategy to establish itself as a leading player in the evolving crypto landscape, fostering a conducive environment for innovation and responsible growth in the industry.