Should Crypto Trading Be Treated as Gambling?
In 2009, Satoshi Nakamoto unveiled Bitcoin, putting the digital, decentralized currency theory into practice. And in the past decade or so, the crypto market has made incredible waves in the finance world. It quickly became one of the top three most popular trading markets, third only to the stock market and the foreign exchange market. Phrases like “blockchains,” “NFTs,” and “mining” are now on everyone’s lips, and Bitcoin or Ethereum have become household names.
And it isn’t just people that have jumped on the bandwagon. Businesses have already begun accepting crypto-based payments for their goods and services. For example, coffee shop chain Starbucks tested their crypto-payment program in 2021, and have already put it in wide use. Whole Foods, the healthy food market, proudly accepts Bitcoin as an option. Not to mention, the iGaming industry has fully-immersed itself in crypto gambling.
The Link Between Crypto and Gambling
In the past few years, crypto casinos have seen a huge surge in popularity. For those that don’t know, crypto casinos are gambling websites where you can make deposits and withdrawals using the most popular and trustworthy cryptocurrencies. For example, the Big Wins crypto slots accepts Bitcoin, Ethereum, Tether, and much more.
But it isn’t just crypto casinos that have embraced the new phenomenon. Even online gambling websites that usually operate on FIAT currency have begun to accept Bitcoin and Ethereum recently. So, certainly, we can say that there is a positive relationship between cryptocurrency and online gambling.
However, the question we would like to answer is whether crypto trading itself should be considered gambling? According to lawmakers in the United Kingdom, the answer is yes. So, let us take a look at why they believe this to be the case, and whether the crypto community agrees.
Why Treat Crypto Trading like Gambling?
The treasury committee of the United Kingdom has recently come out with a statement, saying that consumer cryptocurrency trading is a form of gambling, and should be regulated as such. According to the cross-party committee of members of parliament, unbacked crypto-assets pose a danger to consumers. Their argument boils down to the volatility and rather a huge risk of losses. According to the committee, trading in cryptocurrency is closer to gambling than investing in other markets, like the stock market or forex.
The idea is not to ban crypto trading or to restrict cryptocurrency. Rather, they have proposed crypto trading be hit with similar regulations to gambling. Within their report, they recommended that the UK government impose regulation on unbacked crypto assets, in a similar manner to gambling. So, what exactly were the arguments in favor of regulating cryptocurrency trading as a form of gambling?
The Arguments in Favor
There are two major arguments in favor of treating crypto trading as a form of gambling, at least according to the UK MP committee. In this section of the article, we will go over their arguments, and see if they hold any weight.
- Cryptocurrency is Incredibly Volatile
Most are familiar with the incredible volatility levels inherent to the crypto market. A digital coin could be worth less than a dollar one day, only to surge the next, and spike again on the third. According to the UK committee, this puts cryptocurrency closer to gambling, as casino games are widely known for being vastly volatile.
While at first glance this might make some sense, the argument comes apart when you consider that volatility is an aspect of all trading. Whether you are trading stocks, FIAT currency, or cryptocurrency, you will have to deal with a degree of volatility. And while it is true that the crypto market is quite a bit more volatile than the others, does that necessarily mean it is closer to gambling?
Some might argue that if this was the case, all forms of trading and investing should be considered gambling by default. As they all require beating odds and dealing with volatile prices.
- Crypto Trading is Addictive
The secondary argument is that crypto trading can be quite addictive, similar to problem gambling. And of course, problem gambling is a major issue that we should look into eradicating. It is for this reason that gambling regulations were introduced in the first place. However, can we truly say that problem trading” is any more prevalent in the crypto market than in stock or forex?
There seems to be no evidence of this claim. The committee claims that trading unbacked crypto assets such as Bitcoin or Ethereum can lead consumers to lose an incredible amount of money; enough to where it is life-changing. And while that is absolutely true, the same argument can be applied to trading on the stock market, or trading in foreign exchange. So, what makes crypto different?
What Makes Crypto Different?
Crypto enthusiasts may argue that there is no major difference between trading cryptocurrency and trading any other asset. However, at least according to the UK MPs, there is one major difference. That being, that cryptocurrency has no intrinsic value.
One of the aspects that pushes many people away from cryptocurrency is that these digital assets have no intrinsic value. Rather, their value depends entirely on how much people take an interest. It is precisely this reason why the UK MP committee claims that no social good can come of cryptocurrency, and likens it to gambling, asking to be treated as such.
Some may argue that this demand is anti-progress and technology. After all, the interest in crypto seems to be growing with each passing day. And increasing number of people are purchasing crypto and storing them in their portfolios. Others may believe that this whole argument comes from a place of cynicism.
However, it seems that the opinions presented by the MPs come from a genuine concern for public well-being. Within that same report, the committee fully endorses the use of blockchains, and they even talk about the beneficial aspects of the technology. Despite their less-than-positive outlook on Bitcoin, Ethereum, and similar digital, crypto assets, they fully advocate for the implementation of blockchains in the financial industry. So, we can safely assume that their goal here is not to stifle progress, but genuinely protect the citizens. Even if their opinions might be misguided.
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