UK House of Commons Finance Committee Rejects Recommendation
The UK Treasury has rejected a recommendation by the House of Commons Finance Committee to classify cryptocurrency transactions as gambling.
The UK Treasury explains:
The Treasury Department is adamantly opposed to the Treasury Commission’s recommendation to regulate “unbacked cryptocurrency retail trading and investment activities as gambling rather than financial services.”
Such an approach would run counter to the principle of “same activity, same risk, same regulatory outcome” promoted by international bodies such as the International Organization of Securities Commissions (IOSCO) and the G20 Financial Stability Board (FSB).
It continued that cryptocurrency activities that perform similar functions and pose similar risks to activities in the traditional financial system, such as operating trading platforms and providing custody services, should be subject to the same regulations as traditional finance.
It also notes that the regulatory system for gambling may not adequately address important issues.
Advertisement regulation proposed
Discussions on cryptocurrency regulation at the UK Treasury have highlighted risks related to market manipulation, lack of prudential arrangements and poor financial risk management practices.
The Treasury Department said a “financial services regulation” framework would be better suited to address the risks of cryptocurrencies and create conditions for innovation while safeguarding security.
In developing such a framework, it plans to include a strong set of measures to mitigate consumer risks, including the risk of “consumers being misinformed,” he added.
The UK government has already proposed a financial advertising regulation system specifically for cryptocurrencies. The bill was debated in parliament in June and is expected to come into force by the end of 2023.
Relatedly, the UK’s Financial Conduct Authority (FCA) had just announced on the 4th that cryptocurrency companies had until October 8th to comply with promotional rules after the government enacted legislation to include cryptocurrencies in the financial promotion regime.
The rules apply to all companies selling cryptocurrencies to UK consumers, including those based abroad, and will be regulated, including on websites, social media posts, etc.
In the UK, advertisements for high-risk financial products are obliged to include statements such as “This is a high-risk investment and you must understand the risks.” Virtual currencies are also required to comply with this.
connection: British authorities tighten regulations on cryptocurrency promotions
About the Royal Mint’s NFT Project
The UK Treasury also commented on plans for the Royal Mint to release NFTs (Non-Fungible Tokens), which are currently on hold. At the moment, the NFT project has not been launched, but it will continue to be considered.
He also said that no taxes will be used directly to fund the project. It explained that all costs associated with the development of the project were funded by the Royal Mint’s own commercial business revenues.
What are NFTs?
Abbreviation for “Non-Fungible Token”, a digital token that cannot be replaced and has a unique value. Not only is it used for exchanging “digital items” in blockchain games, but it is also attracting attention as an epoch-making means of giving back to right holders (creators) in the “secondary distribution market”, which was difficult to achieve with second-hand sales, as well as proof of ownership of high-priced works of art.