In a new report, a Committee of MPs has highlighted that cryptocurrencies such as Bitcoin have no intrinsic value and serve no useful social purpose, while broadly being used by criminals in scams, fraud and money laundering.
Unbacked crypto assets – often called cryptocurrencies – are not supported by any underlying asset. They are the most prominent form of crypto, with Bitcoin and Ethereum alone accounting for two-thirds of all crypto assets.
As such, the Committee concluded that, due to the precarious nature of cryptocurrencies, they pose a large risk to consumers due to the risk of loss involved. And, as a result of unbacked crypto trading being closer to gambling than finance, the MPs have called on the Government to look into regulating it similarly to gambling.
Commenting on the report, Harriett Baldwin MP, Chair of the Treasury Committee, said: “The events of 2022 have highlighted the risks posed to consumers by the crypto asset industry, large parts of which remain a wild west. Effective regulation is clearly needed to protect consumers from harm, as well as to support productive innovation in the UK’s financial services industry.
"However, with no intrinsic value, huge price volatility and no discernible social good, consumer trading of cryptocurrencies like Bitcoin more closely resembles gambling than a financial service, and should be regulated as such. By betting on these unbacked ‘tokens’, consumers should be aware that all their money could be lost.”
