A cross-party Committee of MPs proposed the law change in May 2023.
In its official recommendation, the Committee argued that crypto assets had “no intrinsic value” and cautioned against regulating them as financial assets, as it could create a “halo effect” that misleads consumers into believing that this activity is safer or protected when it is not.
Responding to the Committee’s concerns on July 19, Andrew Griffith, Economic Secretary to the Treasury, stated that such regulation would be contrary to global standards and could drive crypto asset activity offshore, while also failing to address certain risks such as market manipulation or improper disclosures associated with trading them.
Regulating crypto as financial assets
The report further added that a financial services regulatory framework is “more appropriate for addressing the risks of unbacked crypto assets and creating the conditions for safe innovation.”
The official statement from the government also highlighted recent progress made in crypto regulations.
It includes laws against misleading advertisements and progress made with passing the Financial Services and Markets Bill (FSMB) into law to regulate crypto and stablecoins. The FSMB “will be in force by late 2023” wrote the government authority.
The report also mentioned the Royal Mint NFT, saying that the launch remains canceled for the present but the proposal will be kept “under review.”