Treasury Committee publishes Government’s response to Regulating Crypto report

The Treasury Committee today publishes the Government’s response to its report on Regulating Crypto.

In the report, published in May, the cross-party Committee of MPs called for consumer trading in unbacked crypto to be regulated as gambling.

Unbacked cryptoassets – often called cryptocurrencies – are not supported by any underlying asset. They are the most prominent form of crypto, with Bitcoin and Ether alone accounting for two-thirds of all cryptoassets.

Given their price volatility and the risk of losses, the Committee concluded that retail trading in unbacked crypto more closely resembles gambling than a financial service and should be regulated as such.

The Committee outlined concerns that regulating consumer crypto trading as a financial service – as proposed by the Government – would create a ‘halo’ effect, leading consumers to believe this activity is safe and protected, when it is not.

The MPs recognised that technologies underlying cryptoassets may bring benefits to financial services, particularly for cross-border transactions and payments in less developed countries, and called on the Government and regulators to keep pace with developments so potentially productive innovations are not unduly constrained.

In its response, the Government disagrees with the Committee’s recommendation on gambling and re-affirms its intention to regulate retail trading in unbacked cryptoassets as a financial service.

Around 10 per cent of UK adults hold or have held cryptoassets, according to HM Revenue & Customs.

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Notes to editors:

• The Government’s response can be accessed here.
• Further information on the Committee’s inquiry, including oral evidence replays and transcripts, correspondence and written evidence submissions, can be found here.