...By Larry John for TDPel Media.
Just one year ago – April 4, 2022, to be exact – the government announced ambitious plans to establish the UK as a “global cryptoasset technology hub.”
The intention was to position the country at the forefront of this emerging technology and foster the further growth of the market.
However, what seemed like a fashionable move back then appears increasingly impractical today.
Treasury Select Committee’s Perspective:
The Treasury select committee has recently recommended abandoning the proposed regulatory framework that treated cryptoassets as a legitimate part of the financial services industry.
Instead, they propose categorizing it as a form of gambling, which is a more accurate representation of its nature.
Criticism and Understanding:
Predictably, there have been complaints from individuals in the industry, such as those with titles like “Crypto & Digital Assets Technical Director,” claiming that MPs fail to grasp the essence of bitcoin and similar cryptocurrencies.
However, perhaps the MPs understand it well enough.
Parallels with Equities:
To comprehend bitcoin and other cryptocurrencies, it is helpful to view them as equities.
When purchasing bitcoin, for example, you are essentially acquiring a share in a company that lacks tangible revenues.
It resembles a speculative dotcom stock, reminiscent of those that faltered during the internet boom and bust of the early 2000s.
Blinded by Belief:
Bitcoin enthusiasts often reject this analogy, as their conviction blinds them to the reality.
They firmly believe that bitcoin will save the world or liberate it from the control of central bankers.
However, Committee Chair Harriet Baldwin makes a valid point that cryptoassets possess “no intrinsic value, huge price volatility, and no discernible social good.”
Treating Cryptoassets as Gambling:
In light of the above, it is fitting to regard cryptoassets as equivalent to a William Hill shop, a popular UK bookmaker.
Treating them as gambling aligns with their characteristics and mitigates misconceptions about their true nature.
Consequently, it would be reasonable to reconsider the UK’s aspiration to become a global crypto technology hub, leaving such endeavors to other locations more suitable for this purpose.