A high-profile UK problem gambling treatment charity has drawn parallels between cryptocurrency investment and betting and the harm, financial and otherwise, this can cause.
GamCare had commissioned a research project by YouGov to examine investments made by the UK public, with a survey of 4,200 adults finding that 40% lost money on cryptocurrency in comparison to 34% who made financial gain.
Making comparisons to gambling, GamCare also cited that people experiencing harmful gambling are more likely to own cryptocurrency than the general population. The quantitative difference was shown in statistics of 51% against 11%.
“For many consumers, cryptocurrency purchases are a way to diversify their investment portfolio,” said Raminta Diliso, GamCare Financial Harm Manager.
“However, what we have seen on the National Gambling Helpline over the past few years is that serious harm can occur if it goes too far and it’s not always the get-rich-quick opportunity some people may think it is.
“The volatility and unpredictability of these currencies can sometimes create a similar environment to gambling, where people are starting to chase the rush rather than feel they are engaging in a financial activity.”
This is not the first time that concerns have been raised in the UK about the potential financial instability and consumer impact of crypto markets and the trading of crypto assets.
Some MPs have been vocal in recent years in their desire to see cryptocurrency trading be treated as a form of gambling from a regulatory standpoint. Legislators have cited the high-volatility of crypto markets and the potential for investors to lose large sums of money.
In May 2023, the House of Commons Treasury Committee recommended that crypto trading be treated as a form of gambling. However, the Committee also listened to the views of some stakeholders such as Ian Taylor, a Board Advisor at CryptoUK, who advised that cryptoassets be viewed as a different investment class.
Two months after the Treasury Committee’s report, the Economic Secretary to the Treasury, Andrew Griffith MP, confirmed that the government would not treat cryptocurrency as a form of gambling.
Meanwhile, Prime Minister Rishi Sunak has spoken favourably of cryptocurrency in the past, likely seeing the sector as playing a key role in his vision of making the UK an international hub for fintech innovation.
In April last year, whilst at the time still Chancellor of the Exchequer under then-PM Boris Johnson, Sunak asserted that ‘robust regulation’ is needed to ensure a ‘mature crypto asset sector’ is formed in the UK.
Although the government appears to be warming to cryptocurrency as part of its hopes for British financial innovation, it is clear from GamCare’s research and statements that concerns remain about the volatility of the markets.
The collapse of FTX in early 2023 is a stark reminder of this, with the downfall of the world’s third-largest crypto exchange causing immense volatility in the global markets and seeing many investors lose money.
GamCare noted that over the past two years, it has recorded over 200 calls to its National Gambling Helpline from people experiencing struggles with online financial markets such as crypto, including accounts of losses of over £50,000 and spending of mortgage deposits.
Commenting on the findings, Harriett Baldwin MP, Chair of the Treasury Committee, said: “The Treasury Committee recently took a close look at the state of the cryptoasset market. The sharp peaks and drops in the value of cryptocurrencies clearly demonstrates the risks speculating on them can pose to consumers.
“Trading of cryptocurrencies, like Bitcoin, is equivalent to gambling. By betting on these unbacked ‘tokens’, consumers should be aware that all their money could be lost.”