UK stages crackdown on crypto-asset ‘gambling’ craze

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Posted on: January 4, 2022, 12:39 p.m.

Last update on: January 4, 2022, 01:39 a.m.

UK lawmakers have said they want digital trading products to be included as part of an ongoing review of the country’s gambling laws, The telegraph reports.

crypto assets
The UK government says it is “taking action” on crypto assets like bitcoin, NFTs, FTPs and other digital financial instruments. (Picture: Yahoo Finance)

The calls come as these products could be harmful to young people and should be regulated as strictly as gambling and other financial instruments.

The crypto-asset market is completely unregulated in the UK, as it is in most jurisdictions around the world.

Currently, the only UK agency taking an active stance against crypto is the Advertising Standards Authority. It focuses on potentially fraudulent marketing and has limited powers to sanction bad actors.

The UK financial regulator, the Financial Conduct Authority (FCA), wants more powers to control the crypto space. Currently, the agency only has the power to intervene where there is evidence of the potential for money laundering or terrorist financing.

No Fan Token Fans

Meanwhile, crypto permeates mainstream culture, including the country’s national sport.

Faced with the threat of losing revenue streams due to expected restrictions on gambling advertising, many professional soccer teams are entering into crypto business deals to offset the blow.

These include Fan Token Partnerships (FTP). These claim to give fans a say in running certain aspects of a team by buying tokens.

But critics say FTP is a cynical attempt to exploit fans by monetizing trivial questions that could easily be answered by an online poll. Instead, they create financial barriers to fan engagement.

The ASA has chastised Arsenal for marketing their fan tokens in a way that is misleading and fails to explain the risks.

Meanwhile, in November, EPL champion Manchester City was forced to suspend its partnership with crypto start-up 3Key when it was discovered that its executives lacked a digital presence.

Technology Overshoot Regulators

The rise of brokerage apps, like Robinhood, is also causing concern. These platforms make investing and trading easier and more affordable for consumers. But they also borrow elements from the gaming and social gaming industries.

Meanwhile, the hot market for NFTs, or non-fungible tokens, is so new that new regulators have barely figured out what they are, only how to regulate them.

For the uninitiated, NFTs are blockchain-based digital tokens that can represent ownership of a virtual object, like collectible sports cards or a work of art.

The UK Gambling Commission recently warned the public that Sorare, the fantasy sports and football NFT trading platform, was operating without a licence. The regulator is currently studying whether it really needs it.

“Financial Wild West”

Meanwhile, the UK Treasury spokesman said The telegraph this week, the department was “taking action to protect consumers in response to the development of certain crypto-assets.”

This includes advice on proposals to ensure that crypto-asset promotions are fair, clear and not misleading, and that crypto-assets meet the same high standards expected of other payment methods,” added the spokesperson.

But for some, that’s not enough.

“It’s the Wild West, that gray area between high leverage financial investments on the one hand, and those products that could quite easily and reasonably be considered gambling,” said Tory MP Richard Holden. iNews. “There has to be a clear differentiation there in order to protect people.”

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