May 17 (Bloomberg) -- Bitcoin, ethereum and other cryptocurrencies should be regulated as gambling given the huge risks they pose to consumers, a group of British lawmakers said in a report. The U.K., which wants to become a global hub for cryptocurrencies and their underlying blockchain technology, is currently planning the first rules for crypto assets, with cryptocurrencies currently only subject to anti-money laundering safeguards.
Bitcoin and ethereum, which account for two-thirds of all crypto assets, are not backed by any currency or asset, leading to price volatility and the potential for all money invested in them to be wiped out, according to a report by the U.K. Parliamentary Treasury Committee. Regulating retail transactions and investments in unsecured cryptocurrencies could have a "halo" effect, leading consumers to believe that the activity is safer than it actually is, or that it is protected. Therefore, the panel strongly recommends that the government regulate retail transactions and investments in unsecured crypto assets as gambling rather than financial services, consistent with what it calls the "same risk, same regulatory outcome" principle.