Interesting take…but let’s get to the bottom of it shall we?
The Treasury Committee has released a report on the UK's Economic and Financial Affairs highlighting the challenges of the UK economy, including rising inflation, slowing growth, and increasing inequality.
Not only that, the report has pinpointed that the UK's financial system is vulnerable to shocks, and that the government needs to take steps to strengthen it, which has come as no surprise to all of here at the Nephos Group & Myna.
However, one of the main concerns that has come across within the statement is that cryptoassets have "no intrinsic value" and that their price volatility "exposes consumers to the potential for substantial gains or losses, while serving no useful social purpose."
With more shocking statements around cryptoassets resembling gambling more than a financial service, with notion that “unbacked” cryptoassests exposed "consumers to the potential for substantial gains or losses, while serving no useful social purpose". (Paragraph 51).
[Interesting to say the least…]
Following this, CryptoUK released a statement strongly disagreeing with the Treasury Committee’s conclusion stating:
“…we are both concerned and disappointed by these claims which are unhelpful, false, fundamentally flawed and unsubstantiated. The statement fails to reflect the true nature, purpose and potential of the crypto industry.”
Which, here at Myna, we completely get on board with.
However, feeling disappointed and disagreeing with the government comes with challenges always.
On the morning of the report release, Nephos Group founder, Joe David, took an interview with BBC Radio 5 Live to discuss the release, and was faced with once again outlandish claims on crypto being heavily gambling focussed with one example honing in on one a piece of social media content based around earning 1 million dollars from crypto.
Which brings us here, ready to break this down for you in a more to the point manner.
1: Gambling is tax free.
Whilst our clients and many others would love to go into building their investment portfolio under a tax free notion, it completely discredits the utility and substance of certain crypto asset classes like BAYC, BTC, ETH. Although Crypto is deemed as it’s own asset class by many, the subclasses are almost infinite, therefore BAYC, NFTs, scam coins,meme coins and sh*tcoins cannot possibly be painted with the same brush.
Additionally, those who have built valid crypto-based businesses would only fall at the first hurdle with their business being named as gambling first, this is far from what we want as a whole.
Not to mention, would HMRC be this welcoming with a loss on such a large stream of income?
2: Gambling is risky.
Like near enough anything you do in life and business, you will be taking a risk. However, a BBC article written by two technology reporters highlighted examples of gambling addicts losing thousands when venturing into crypto after hanging up their gambling boots, which not only hones in a one sided story, but once again utilises negative media frenzy.
At Myna we have over 800 clients we have done tax returns for alone this year, with many of them coming in at a ‘win’ not a loss.
When working with our clients and supporting them with their investments and businesses alike, we would never ever recommend putting in more than you are willing to lose.
Whilst the Conservative MP Tracey Crouch states that crypto feels like the “Wild West town with no sheriff," and we can agree to some extent, that doesn’t mean placing such harsh regulations on crypto is the right path to success, plus is this the outlook from someone with the right experience, knowledge and support network? We think not.
3: Stating it’s gambling is lazy.
Our resident crypto tax expert, Jamie Nuttal, states that:
“There seems to be a lazy demeanour around wanting to help create guidance and appropriate legislation. Is this a cop out? Surely these MPs will have no traction on this.”
And we wholeheartedly back this statement, the experts are waiting in the wings for questions, breakdowns and answers - is this really the right route for the thousands if not hundreds of thousands of crypto investors in the UK?
4: ‘Risky innovation’
MPs have noted that whilst they support innovation, the potential benefits from cryptoassets remain uncertain.
“While we support financial innovation where there are potential benefits, the extent of the benefits cryptoasset technologies may bring to financial services remains unclear. In the meantime, the risks posed by cryptoassets to consumers and the environment are real and present (Paragraph 36).”
Which not only backtracks on the UK wanting to become a crypto hub but also completely removes the UK from the running with other countries utilising crypto to their advantage…
Interesting moves for a country that seems to want to be ahead of the times and forward thinking is it not? Not only is that making us look disjoined from other governmental procedures, but puts a stint on innovation as a whole with the rest of the world moving at pace to a web3 focussed running.
5: Crypto regulation.
HM Treasury has said that it stands by its proposal to regulate crypto as financial services, stating:
“Risks posed by crypto are typical of those that exist in traditional financial services and it’s financial services regulation – rather than gambling regulation – that has the track record in mitigating them. Crypto offers opportunities but we are taking an agile approach to robustly regulating the market, addressing the most pressing risks first in a way that promotes innovation.”
This is a comforting notion from a regulatory perspective and where we are as a nation believe and expect the Crypto space to progress towards. However, it is concerning that the Government seems to have a completely different agenda to HMT and not singing from the same hymn sheet. Our Crypto Tax expert, Jamie, further comments that:
“Although this may raise eyebrows, it may be the start to an open discussion between stakeholders to push forward with more haste towards more clarity, consistency and a brighter future for the UK as a Crypto Hub. It would be interesting to see if Rishi Sunak and/or Lisa Cameron have any comments on all of this.”
So where does this leave us?
Honestly, from our perspective in the nicest way possible…we should rip the report up and start again.
From the listed members, whilst we don’t discredit them as good MPs, we are far from clear on whether the MP’s are even crypto advocates, are utilising crypto in anyway shape form, or if they truly understand the tech behind it.
We are firm believers in everyone holding an opinion, but unless you can come to the table with a validated and educated opinion, where can we draw the line?
Overall the report is:
- Biased
- Untechnical
- This report is now at odds with HMRC
- We strongly disagree with the stance
- We don’t believe this is part of the solution
- We’ve taken 10 steps back after the push forward we have seen overall
We’re here to keep you updated with any further updates and ready to comment on this as a whole going forward, the good thing about the crypto community is that when times such as these arise, the community comes together to bring forth solid reasoning and progress no matter what. The focus should hone in on bringing the potential of cryptoassets to the forefront in a responsible manner, rather than completely dismissing it as a whole.
