- As the Unitedย Kingdom builds its cryptocurrency framework, it is getting manyย of different advice.
- MPs feel that cryptocurrency is akin to gambling; others liken it to stocks.
- Either way, the Unitedย Kingdom has promised to be friendly to cryptocurrency, even if itโs viewed as a gamble.ย
The Unitedย Kingdom Government has made promises to be friendly in its approach to cryptocurrency regulation. Still, as it mulls over a framework, it is given plentyย of advice from different sectors.ย
Following advice from parliamentโs Treasury committee that cryptocurrency should be treated like gambling by Unitedย Kingdom regulatoryย authorities, a worldwide markets watchdog has urged the Unitedย Kingdom to regulate cryptocurrency the same way it would traditional assets, like stocks.ย
The International Organization of Securities Commissions (Iosco), of which the UKโs Financial Conduct Authority (FCA) and the U.S.โs SEC are members, stated its members should regulate this new digital investment space in ways that โare the same as, or consistent with, those that are required in traditional financial markets.โ
Clear and Concise Regulations
Ioscoโs recommendation to treat cryptocurrencies like stocks and bonds seemsย to be an effortย toย win clear and concise worldwide regulation of the space. There are different approaches, frameworks, and stances on cryptocurrency, which Iosco feels could lead to regulatory arbitrage โ a practice in which enterprises benefitย from loopholes in numerous countriesโ regulations.
Rather, Iosco would have it so platforms of trading have to publicly disclose how they assess cryptocurrency coins and cryptoย tokens before offering them for trading. These platforms would have to clearly explain how they store and safeguard clientsโ cryptocurrency and likewise prove assets are separated from the exchangeโs own assets โ as was theย challenge with FTX.ย
Varying Approaches
Althoughย while Ioscoโs approach appears more in line with the general usage of numerous cryptocurrencies โ using them as financing vehicles โ British MPs view trading in cryptocurrencies as akin to gambling.ย
MPs on the Treasury select committee worry that cryptocurrency trading, like gambling, can be addictive. Furthermore, they believe that investors โbettingโ on the price of unbacked coins and cryptoย tokens could lead to substantial financial losses.ย
The MPs are likewise worried that if the FCA were to take cryptocurrencies under their jurisdiction, it would lead investors to believe the industry was โsafer than it isโ or that they were protected from financial losses.
The other side
- The Unitedย Kingdom Government isย veryย likely place that responsibility of regulating cryptocurrency with the FCA, which asย ofย now ensures enterprises comply with money-laundering regulations. If this is the case, the FCA will probably regulate cryptocurrencies with a hybrid approach.
Why This Matters
The direction regulatoryย authorities take in regulating cryptocurrencies will undoubtedly impact how the sector operates in the Unitedย Kingdom. Nonetheless, the Government is determined to empower innovation and allow these digital assets to flourish โ but will they thrive like stocks, or like betting shops?ย
Read more about recent gambling reforms in the UK:
Cryptocurrency Assets Unscathed in UKโs New Gambling Reforms
Read more about Hong Kongโs cryptocurrency rules:
Cryptocurrency Investors Can Trade Under New Hong Kong Regulations from June 1st
