Source · Select Committees · Treasury Committee
Fifteenth Report - Regulating Crypto
Treasury Committee
HC 615
Published 17 May 2023
Recommendations
2
Accepted
Para 31
Ensure FCA's cryptoasset authorisations gateway is open and effective for innovation.
Recommendation
It has been more than four years since our predecessor Committee’s Report called for greater regulation of the cryptoasset industry, and the FCA faces challenges in implementing existing and proposed crypto regulations. It is important that the Government and regulators …
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Government Response Summary
The government agrees on keeping pace with crypto developments, highlighting existing AML-CTF and financial promotion regulations. It commits that HM Treasury and the FCA will work to clarify authorisation gateway standards and the FCA is increasing capacity and adopting a timely process for complete applications.
HM Treasury
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4
Accepted
Para 37
Adopt balanced approach to cryptoasset development, avoiding public funding without clear use case.
Recommendation
We recommend that the Government takes a balanced approach to supporting the development of cryptoasset technologies. It should seek to avoid expending public resources on supporting cryptoasset activities without a clear, beneficial use case, as appears to have been the …
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Government Response Summary
The government strongly agrees with a balanced, technology-neutral approach, confirming its current regulation-focused strategy. It commits to implementing the first FMI Sandbox this year to support responsible innovation and states the Royal Mint is not proceeding with the NFT, with no taxpayer money used.
HM Treasury
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6
Rejected
Regulate retail trading of unbacked cryptoassets as gambling, not a financial service.
Recommendation
We strongly recommend that the Government regulates retail trading and investment activity in unbacked cryptoassets as gambling rather than as a financial service, consistent with its stated principle of ‘same risk, same regulatory outcome’. (Paragraph 52) Regulating Crypto 19
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Government Response Summary
The government explicitly rejects the recommendation to regulate unbacked cryptoassets as gambling, stating it would be a fundamental departure from its intended approach which aligns with international standards for financial services.
HM Treasury
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Conclusions (2)
3
Conclusion
Accepted
Para 36
While we support financial innovation where there are potential benefits, the extent of the benefits cryptoasset technologies may bring to financial services in the future—and the areas in which the technologies may have the most impact— remains unclear. In the meantime, the risks posed by cryptoassets to consumers and the …
Government Response Summary
The government strongly agrees with a balanced, technology-neutral approach, acknowledging the uncertain benefits and evolving nature of cryptoassets. It reiterates its focus on regulating cryptoasset activity and clarifies that FMI sandboxes will be implemented this year to promote responsible innovation.
5
Conclusion
Accepted in Part
Para 51
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 …
Government Response Summary
The government acknowledges concerns about consumer risks and the 'halo effect' in unbacked cryptoassets, stating it has implemented robust measures to ensure consumers understand the high risks involved, while maintaining its financial services regulatory approach.