Cryptocurrencies And Gambling – The UK Regulation Discussion Continues

Republished By Plato

Followers: 0

In May 2023, the UK Treasury Committee recommended that trading and investing cryptocurrencies should be regulated as gambling. The reason behind this recommendation was cryptocurrencies carry many of the same risks as gambling, according to the committee.

The Treasury rejected the recommendations. However, work is still ongoing regarding the creation of a regulatory framework for cryptocurrencies in the UK. Many of the developing regulations and calls for further action are similar to those that surround gambling in the country, so it’s interesting to look more closely at the work of the regulatory bodies involved, the UK Gambling Commission (UKGC) and the Financial Conduct Authority (FCA).

UK Government gambling review and white paper

The UK Government’s white paper on the review of the Gambling Act 2005 included an array of recommendations for changes to the regulated gambling market in the country. These regulations apply to gambling operators with a UKGC license and members of the GAMSTOP scheme. They do not apply to non gamstop casinos that are licensed in other parts of the world and have their own protections in place for customers.

The recommendations included in the white paper that are likely to have a regulatory effect include the following:

Restricting the maximum stake for online slot spins.
Conducting “unobtrusive checks” when gamblers lose a specific amount of money.
Reviewing free bets and bonuses to ensure they do not cause harm to customers.
Creating an independent gambling ombudsman to deal with player complaints.

In addition to the recommendations in the white paper, a recent agreement by Premier League clubs aims to further protect people against problem gambling. The clubs have voluntarily agreed to end front-of-shirt sponsorship by gambling firms from the 2025/26 season due to its potential link to problem gambling, including the attraction of young people to betting.

Similar restrictions and proposals for cryptocurrencies

Despite the Treasury’s decision not to regulate cryptocurrencies in the same way as gambling, the sector has recently been the subject of new advertising rules announced by the FCA that have similar reasoning behind them to gambling regulations. This reasoning is to protect people from the inherent risks that exist in gambling and cryptocurrency trading and investment.

Under the new FCA rules:

From 8 October 2023, companies advertising crypto assets must provide a cooling-off period.
Refer a friend bonuses are banned.
Clear risk warnings must be given to people investing or trading.

There are clear similarities to the gambling sector, where changes to bonuses are being considered and where risk warnings and protection advice feature in industry advertising.

In addition to FCA changes, the Law Commission is seeking further clarity in the cryptocurrency arena. The Commission is asking for the creation of a separate asset category for cryptocurrencies and the setting up of a panel and legal framework that are specific to cryptocurrencies.

As work continues regarding implementing recommendations from the government’s gambling white paper and the progression of cryptocurrency regulation, more similarities are likely to emerge. These similarities happen because the main aim of both areas of work is to protect people who gamble, trade, or invest.