I believe that this was incorrect, attractive, and contemptuous. Regarding utility, the committee has a point.
Even if you have an open mind and believe that distributed ledger technology, stable coins, and central bank digital currency have potential, you may still believe that cryptocurrencies have not shown to be effective as a store of value, a means of trade, or a tool for financial inclusion. Oliver Linch, CEO of Bittrex Global, claims that “the industry still does a very bad job of explaining things.” “It’s been wink wink, if you know, you know, to the moon nonsense.”
The committee had a valid concern that financial regulation might have a “halo effect” on that type of nonsense, creating a false sense of security. However, Marc Jones, a lawyer at Stewarts Law company, notes that given the ownership aspect of crypto assets, “to say it’s gambling makes no sense legally.” It would also be unlikely to lead to efficient regulation.
The line separating gambling from financial regulation is already hazy. Spread betting and other forms of leveraged trading are regulated by the Financial Conduct Authority but are taxed as gambling. An at-source version of the FCA’s warnings in the absence of further authority may be seen in advertisements for betting platforms, which clearly state that 80% of retail accounts are losing money.
The UK’s gambling laws are still attempting to keep up with the development of smartphones. It is “not fit for purpose,” according to Matt Zarb-Cousin, a proponent of regulating gaming. The committee’s findings is unlikely to influence the government’s course of action, which in February proposed to regulate cryptocurrency under the UK’s current financial services framework, following the lead of Europe and other regions like Hong Kong. That does not diminish its importance. The attitude has changed after much hysterical discussion about the UK being a “global crypto hub”; curiously, this most recent broadside may help to maintain the change. More and more, cryptocurrency will be expected to follow traditional financial regulations. It is unlikely that the committee will advocate for a softer approach in the name of innovation.
The plans for gambling reform this year belatedly promise restrictions on free bets and other incentives. of 2016, the FCA’s restrictions on leverage and prohibitions on account bonuses and promotions sent shares of spread-betters plummeting. According to Zarb-Cousin, spread betting and cryptocurrency can harm similar to gambling. However, it is preferable to include safeguards like self-exclusion options in the stricter financial structure.
It would be wrong to assign different regulators different responsibilities. The crypto sphere is not easily divided into areas that might be useful and areas that are wholly useless. Regulatory arbitrage is encouraged by splits. Regulators should be just as interested in the relationship between cryptocurrency and traditional finance as they are in the tokens themselves.
Internationally, this is also accurate. The US crackdown is based on safeguarding investors with the same securities regulations and legislation as the rest of the financial sector: Gary Gensler, chair of the SEC, stated last year that there is “no reason to treat the crypto market differently just because different technology is used.”
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