- The Treasury Select Committee was made up of members of Parliament.
- In addition, it will subject cryptocurrency gaming winnings to the highest tax rate.
For retail investors, unbacked cryptocurrencies like Bitcoin (BTC) should be considered as gambling, according to a new recommendation by a UK regulatory group. The Treasury Select Committee, a cross-party committee made up of members of Parliament, “strongly recommended” this approach for the trading of digital assets in a report released on Wednesday, May 17.
This suggestion is the result of a months-long study on the best methods for monitoring crypto assets. However, if cryptocurrency trading were regulated in the same way as gambling, it would go against the trend shown in other nations.
The report mentioned:
“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”.
No Intrinsic Value and Huge Price Volatility
Currently, about 10% of UK individuals have some kind of cryptocurrency in their possession. The convention dictates that the UK government must reply to the report within two months after its release.
The UK panel believes that digital assets have “no intrinsic value, huge price volatility, and no discernible social good,” which is why they equate Bitcoin investment to sports betting. This distinguishes them significantly from more conventional forms of capital.
In addition, it will subject cryptocurrency gaming winnings to the highest tax rate. But similar to the gaming industry, crypto players will need to authenticate client identities and implement anti-money laundering procedures.
The United Kingdom’s actions are not unprecedented. Countries like Singapore have taken steps to restrict cryptocurrency trading at the retail level. According to Singaporean authorities, most individuals shouldn’t invest in cryptocurrencies because of their high degree of volatility.