ii comments on calls for cryptocurrency trading to be regulated as gambling
17th May 2023 14:14
by Myron Jobson from interactive investor
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interactive investor comments on a new report from the Treasury Committee.
Commenting on a report by the Treasury Committee calling on cryptocurrency trading to be regulated as gambling, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “In raising their concerns of a regulatory ‘halo effect’ being created, the Treasury Select Committee has effectively sounded an alarm on an asset which has grown unchecked for well over a decade.
“However, research tells us that young people are more aware of cryptocurrency than any other investment, and we also know that crypto has become a gateway investment for many.
“Leaving aside the potential for Blockchain as an enabling technology, crypto has gone mainstream, with advertising only recently being regulated. Unfortunately, investing in unbacked crypto is like taking a journey into fantasy land. Whether telling a vast swathe of the population that they are gamblers is the way to change hearts and minds is another matter entirely. Ultimately, we need to see better financial literacy in the UK, and we also need to see the financial services industry make a better case for investing.”
Richard Wilson, CEO, interactive investor, says: “What matters is transparency and that's where the 'gambling' label around crypto is interesting. There are broader lessons here and the industry and regulator should take note, crucially about how companies describe themselves. Consumers need to be clear whether they’re dealing with a bank or a casino. 'FCA regulated’ doesn’t mean much when you have lost your shirt buying a high-risk product without even realising it.”
Context around need for tighter labelling parameters across the board
One example of this would be the operating models employed by firms involved in spread-betting and CFDs, where it can be unclear whether such services offer an underlying equity dealing service or contracts for difference (CFD) service (or a combination of these services). In combination with active marketing campaigns, those customers could find themselves caught in a rather opaque relationship, inadvertently investing into complex derivative products.
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