UK rejects call to regulate digital assets

UK :

rejects call to regulate digital assets :

• The UK Government rejected a proposal

• by the House of Commons Treasury Committee in

• May to regulate digital assets as gambling rather than financial services

Noting that it "strongly disagrees with the Commission's recommendation", she noted concerns that such an approach might run counter to international trends.

The House of Commons Treasury Committee is responsible

for scrutinizing Treasury policies and procedures

It is :

1. the government department responsible
2. for the country's economic
3. and financial affairs.

On 17 May :

The Commission published a report entitled "Regulating digital currencies"

which noted that consumer speculation in unsupported digital assets

such as BTC and Ethereum

is an area of particular concern and that

"the Government needs to take a different approach

in order :

to better protect consumers from harm :

The proposed different approach was to regulate digital assets as a gambling.

The government and Treasury took some time to consider the proposal

but on July 19, they rejected the committee's proposal.

"The UK Treasury is aware of the many consumer risks described in the report, as well as the urgent need for robust and effective regulation," the Treasury replied.

However :

• HM Treasury strongly disagrees with

• the Commission's recommendation to regulate

• "retail and investment in unsupported cryptocurrencies

as a gambling rather than a financial service.

• Such an approach would be totally inconsistent

• with the universally agreed recommendations of

• international organizations and standard-setting bodies .

including IOSCO and the Group of

20 Financial Stability Board (FSB) ", according to the Treasury Department.

Both IOSCO :

and FSB put digital assets firmly into financial services.

The Treasury response also raised questions about the effectiveness of

gambling regulation and the gambling commission that

oversees the sector to deal with digital assets.

However :

1. the supervision of financial risks
2. similar to those in financial markets
3. is not within the competence

or area of expertise of the Gambling Commission. 

1. According to the reply
2. the Commission's desire
3. expressed in May

for strong regulation of digital assets was

In fact :

• "fully compatible with the Government's approach"

• referring to the regulatory system for financial upgrades of

• already existing digital assets.

After Brexit it contains provisions that place digital assets

and stable currencies within the scope of financial services regulations.

Passage of :

the FSMB Bill expands banking rules of

the Financial Services and Markets Act 2000 (FSMA)

The basic legislative framework

for overseeing financial services in the UK - to stablecoins and digital assets.

1. This means that
2. digital assets will be officially recognized
3. as a regulated financial activity in the UK.

Shortly after :

the Committee's recommendations were published

trade body CryptoUK issued a statement saying it

"strongly disagrees with the Treasury Select Committee's conclusion

We are :

concerned and disappointed

by these unhelpful

serious :

fundamentally flawed

and unsubstantiated allegations. 

This was followed in early June by an all-party parliamentary group

(APPG) of digital assets :

composed of 15 Members of Parliament and Lords

It issued a report supporting the Government and Treasury's current approach -- as outlined in the February consultation that outlined plans to integrate digital assets and stable currencies into existing financial services regulations.

APPG supports the HM Treasury position :

which is the best organization of cryptocurrencies and digital assets

• As far as possible and appropriate

• within current and new financial services regulations

• which have a track record of mitigating risks to consumers and investors.

Starting July 19 :

the UK :

Government will continue its plans to integrate digital assets into the FSMA.