Select committee: Treasury Committee
Conclusion 5
Fifteenth Report - Regulating Crypto
Published 17 May 2023
Paragraph 51
Addressed to HM Treasury
Treasury Committee The crypto-asset industry All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Conclusion (the committee's words)
Regardless of the regulatory regime, their price volatility and absence of intrinsic value means that unbacked cryptoassets will inevitably pose significant risks to consumers. Furthermore, consumer speculation in unbacked cryptoassets more closely resembles gambling than it does a financial service. We are concerned that regulating retail trading and investment activity in unbacked cryptoassets as a financial service will create a ‘halo’ effect that leads consumers to believe that this activity is safer than it is, or protected when it is not.
From: Treasury Committee, Fifteenth Report - Regulating Crypto (HC 615), paragraph 51, 17 May 2023
Government response
The government responded to the whole report on 20 July 2023 (deadline 17 July 2023).
Summary written by Accountability Index from the government's response. It is not the government's own words.The government "firmly disagrees" with the Committee's recommendation to regulate retail trading in unbacked cryptoassets as gambling, while agreeing on the need for robust regulation and a balanced approach to innovation.
- It says a financial services framework is "more appropriate" for the risks of unbacked cryptoassets, and gives as reasons the risk of misalignment with international standards, "unclear and overlapping mandates" with the Gambling Commission, and that gambling regulation would be "unlikely to address" risks identified in the FTX failure.
- It "strongly agrees" with the need for a "balanced and technology-neutral approach" to supporting innovation, including cryptoasset technologies.
- On consumer protection, it says legislation on cryptoasset financial promotions "will be in force by late 2023", and points to its consultation proposals, including an issuance disclosure regime.
- It plans Financial Market Infrastructure sandboxes, with the first to be implemented "this year" and run by the FCA and Bank of England. On the Royal Mint NFT, it says the Royal Mint is not proceeding "at this time" but "will keep this proposal under review".