Trading cryptocurrency should be classed as gambling, MPs say

In a brand new report, the cross-party Committee of MPs mentioned that cryptocurrencies such as Bitcoin have “no intrinsic worth and serve no helpful social function”, whereas consuming giant quantities of power and being utilized by criminals in scams, fraud and cash laundering.

Researchers estimated that that in 2020, Bitcoin mining used 75.4 terawatt hours of electricity (TWh) – larger electrical energy utilization than Austria (69.9TWh) or Portugal (48.4TWh) in the identical yr.

The Committee additionally mentioned that cryptocurrencies pose “important dangers to customers” given their value volatility and the potential for main losses. Contemplating this, retail buying and selling extra carefully resembles playing than a monetary service, the report mentioned.

In February, the federal government revealed a set of proposals designed to guard customers from the dangers related to crypto belongings. This consists of regulating the trade and efforts to rein in reckless enterprise practices that characterise a number of the organisations inside it.

However the Committee expressed concern that regulating client crypto buying and selling as a monetary service will create a “halo” impact, main customers to imagine this exercise is secure and guarded, when it’s not.

Round 10 per cent of UK adults maintain or have held crypto belongings, in keeping with HM Income & Customs.

Regardless of the criticisms, the MPs recognised that a number of the applied sciences underlying crypto belongings might convey advantages to monetary providers, notably for cross-border transactions and funds in less-developed international locations. They due to this fact known as on the federal government and regulators to maintain tempo with developments so innovation will not be stifled.

Harriett Baldwin MP, Treasury Committee chair, mentioned: “The occasions of 2022 have highlighted the dangers posed to customers by the crypto asset trade, giant elements of which stay a wild west. Efficient regulation is clearly wanted to guard customers from hurt, as properly as to assist productive innovation within the UK’s monetary providers trade.

“Nevertheless, with no intrinsic worth, big value volatility and no discernible social good, client buying and selling of cryptocurrencies like Bitcoin extra carefully resembles playing than a monetary service, and should be regulated as such. By betting on these unbacked ‘tokens’, customers should be conscious that each one their cash may be misplaced.”

In February, the Financial institution of England introduced a consultation on probably introducing a “digital pound” which might be based mostly on some applied sciences utilized by cryptocurrencies.