LETTERS TO THE EDITOR

How we should regulate crypto

[Re: Treasury Committee’s call for digital assets to be regulated same way as gambling industry is slammed by crypto leaders, 17 May]

The TSC’s proposal to regulate crypto as gambling oversimplifies a complex issue. Undoubtedly, the risks associated with cryptocurrencies are significant and it’s crucial to make consumers aware of these. However, shoehorning it into a gambling framework risks oversimplifying the vast potential of this technology. Crypto is the foundation of several ground-breaking technological applications, including Decentralised Finance, Smart Contracts and NonFungible Tokens. A regulatory framework designed for gambling may not be equipped to nurture these aspects of the industry. Rather than a radical shift to gambling regulation, we need a more comprehensive and nuanced approach to financial regulation. Such an approach would not only provide robust consumer protection but also foster sustainable growth within the industry. The EU Economic and Financial Affairs Council has approved the Markets in CryptoAssets regulation which endeavours to offer an effective regulatory framework for a range of cryptocurrencies, digital assets, utility tokens and stablecoins. A similar approach could be taken by the UK following its consultation on legislating the Financial Services & Markets Bill. The discourse around cryptocurrency regulation demands a detailed and multifaceted exploration, which a one-size-fits-all solution may not adequately provide.