© Thomson Reuters The image shows Bitcoin, Ethereum and Dash under water.Ha Jones
LONDON (Reuters) - Bitcoin, ether and other cryptocurrencies should be regulated as gambling due to their potential use by fraudsters and significant risks for consumers, a group of UK lawmakers said in a report on Wednesday.
The UK is planning its first cryptocurrency regulation, which is currently limited to money laundering protection only.
According to a House Finance Committee report, bitcoin and ether make up two-thirds of all crypto assets and are not backed by any currency or asset, causing price volatility and destroying all money invested in them.
Retail regulation and investment in unsupported cryptocurrencies can create a halo effect, leading consumers to believe that a business is safer than it actually is, or safer when it isn't.
“Therefore, we strongly recommend that the government regulate retail and investment activities in fiat cryptocurrencies as gambling, and not as financial services, in accordance with the stated principle of “equal risk, equal result of regulation,” the report says. .
The Financial Conduct Authority has repeatedly warned consumers that they could lose all their money invested in cryptocurrencies.
The global cryptocurrency has a total market capitalization of around $1.2 trillion, which is a tiny part of the financial system, but the collapse of cryptocurrency company FTX Exchange last year signaled the need for more urgent regulation of the sector.
“Events in 2022 highlight the risks that the cryptocurrency industry poses to consumers, most of which remain in the Wild West,” said Harriet Baldwin, chairman of the finance committee.
According to official figures, about 10% of British adults own or own cryptocurrencies.
The European Union on Tuesday adopted the world's first comprehensive set of rules for the cryptocurrency market. International regulators will soon propose global rules.
The report says that the technology behind cryptoassets can improve the efficiency of payments.
(Reporting by Hugh Jones; editing by Christina Fincher)