ARTICLE · 12 JUNE 2023

Crypto: Is It Gambling Or A Financial Service?

Herbert Smith Freehills Kramer LLP

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This article first appeared in The Banker and is re-published here with its permission. A recent UK Treasury Committee report on crypto assets regulation has reignited the debate over crypto.

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Patricia Horton

This article first appeared in The Banker and is re-published here with its permission.

A recent UK Treasury Committee report on crypto assets regulation has reignited the debate over crypto.

Contrary to government proposals in February to regulate the crypto industry as a financial service, the cross-party group controversially recommended regulating retail trading and investment activity in unbacked crypto assets as gambling.

In their view, the characteristics of unbacked crypto assets – price volatility, lack of intrinsic value or social purpose – more closely resemble gambling than financial services.

It is true that the line between gambling and certain types of financial services is not always clear-cut; for example, the Gambling Commission and the Financial Conduct Authority (FCA) recognise that there are areas where their remits overlap.

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