MPs have told the government that investment in cryptocurrencies such as Bitcoin should be treated as a form of gambling.
The value of cryptocurrencies changes dramatically and consumers risk losing their entire investment, characteristics closely resembling gambling, the Treasury Select Committee found.
According to The BBC:
It also criticised abandoned plans for the Royal Mint to create a non-fungible token (NFT).
The Treasury told BBC News it did not support using gambling regulation.
The risks posed by crypto were “typical of those that exist in traditional financial services and it’s financial-services regulation – rather than gambling regulation – that has the track record in mitigating them”, a Treasury official told BBC News.
The committee said “unbacked” crypto assets – typically cryptocurrencies with no fixed value – exposed “consumers to the potential for substantial gains or losses, while serving no useful social purpose”.
“These characteristics more closely resemble gambling than a financial service,” the MPs added.
Gambling helpline charity GamCare told the BBC that, in the past two years, it had heard from over 300 people who said they were struggling with investing in cryptocurrency and other forms of online financial markets.
Research cited by MPs found 40% of new Bitcoin users were men under 35, commonly identified as the most risk-seeking segment of the population.
Castle Craig, a rehab clinic specialising in treating people with addictions, put us in touch with a young man who had lost heavily on crypto.
The former gambling addict told BBC News that, although he had given up gambling, he had turned to crypto.
“In my head, I just thought this isn’t gambling it’s just an investment but clearly it wasn’t,” he said.
He said he had lost around £150,000 investing in crypto, including money he had borrowed, and that checking his phone to see how the market had moved had become an obsession. “There was no break at all, I was just I was on my phone constantly watching it and just couldn’t sleep,” he recalled.
He said he supported the approach of the committee. “Crypto stuff is gambling,” he said. “You can lose everything you’ve got.”
Former sports minister and gambling campaigner Conservative MP Tracey Crouch welcomed the report.
“At the moment, crypto feels like a Wild West town with no sheriff,” she said.
“However, I’m sure, if properly resourced, the Gambling Commission could bring some order into this complex, risky and often confusing area that has unwittingly sucked in consumers by marketing to them via sports such as football, giving a pretence to fans and others that they are safe and protected.”
