CryptoUK and Kraken Respond to Lawmakers’ Gambling Comparison
Self-regulatory organization CryptoUK and cryptocurrency exchange Kraken UK have criticized a recent report from a panel of British lawmakers. The report suggested that cryptocurrency should be regulated similarly to gambling, a comparison that the crypto firms vehemently oppose.
On May 17, the Treasury Committee “strongly recommended” that unbacked cryptocurrency should be regulated as gambling, citing “significant” consumer risks linked to the asset class such as price volatility and lack of intrinsic value. The lawmakers’ principle of “same risk, same regulatory outcome” didn’t resonate with industry stakeholders, as the UK seeks to position itself as a progressive hub for crypto businesses.
‘Unsuited Approach to Crypto Regulation’, Claims CryptoUK
CryptoUK opposed the proposed regulatory approach, claiming that it would fail to account for the nuances of the crypto sector and its potential to attract inward investment and boost the UK economy.
“No other global jurisdiction has taken this approach and referencing MiCA in the EU, we need to be taking a bespoke and tailored approach for regulation within the industry to ensure the UK does not become a hostile environment for businesses to be domiciled,” argued CryptoUK.
The organization warned that the proposed regulatory framework could encourage UK consumers to engage with offshore crypto platforms, which it believes contradicts the regulatory objective of protecting consumers.
Kraken Fights Back Against the ‘Crypto-Gambling’ Analogy
Kraken UK joined the counter-narrative, emphasizing its fundamental disagreement with the Treasury’s conclusion that crypto assets lack intrinsic value.
“It’s regrettable the committee does not support the opportunity the UK has to be a true global leader in our rapidly developing industry,” said Kraken UK. The crypto exchange further argued that regulating crypto assets as gambling products is both misguided and inappropriate for UK consumers, as gambling protections don’t offer the same level of safeguards as financial services regulations.
The Potential Loss of Capital Gains Tax
CryptoUK further pointed out the financial implications of classifying crypto trading as gambling, as gambling is exempt from capital gains tax.
“Does the UK government wish to exclude tens of millions of pounds in tax income from gains made by the buying and selling of unbacked crypto assets?,” questioned CryptoUK.
The Treasury’s report did not specify the extent to which crypto would be regulated “as gambling.” It did, however, recommend implementing robust regulation and guidelines related to consumer protections, anti-money laundering, and counter-terrorism financing.