The Wild-West crypto industry should be regulated in the same way as gambling, according to MPs.
Trading of cryptocurrencies such as bitcoin is largely unregulated in the UK and has come under fire for its volatility and links to addictive behaviour.
Now MPs on the Treasury select committee are calling on the Government to frame crypto trading as a form of gambling rather than a financial service.
The cross-party committee argues that this will avoid the so-called ‘halo’ effect, which leads consumers to believe it is completely safe and protected, and also reflect the nature of crypto trading, which is more akin to online betting.
Its report said: ‘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.’
High risk: Trading of cryptocurrencies such as bitcoin is largely unregulated in the UK and has come under fire for its volatility and links to addictive behaviour
The Financial Conduct Authority (FCA) oversees crypto firms but does not directly regulate assets.
The gambling sector is regulated by its own watchdog in the UK, which provides advice and guidance – but also penalties – for companies operating in the industry.
The report comes as concerns around crypto have grown in recent months following the collapse of cryptocurrency exchange FTX, leading to billions of pounds being wiped off the value of the wider crypto market and the bankruptcies of rivals.
Tory MP Harriett Baldwin, the committee’s chairman, said: ‘The events of 2022 have highlighted the risks posed to consumers by the crypto-asset industry, large parts of which remain a Wild West.
By betting on these unbacked tokens, consumers should be aware that all their money could be lost.’
Around 10pc of adults hold or have held crypto-assets, according to HM Revenue & Customs, with these figures to continuing to rise.
Charles Randell, former chairman of the FCA, said: ‘Speculative crypto is gambling pure and simple.
‘It should be regulated and taxed as such, with levies to support the debt advice and addiction services for which it will fuel demand.’
The FCA welcomed the report but said: ‘People should still be aware that engaging with cryptoassets remains high risk. If you purchase crypto, you should be prepared to lose your money – there is unlikely to be any protection if something goes wrong.’
The watchdog has recently clamped down on a number of other online schemes, including ‘get-rich-quick’ savings and investments promoted by internet celebrities.
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