Regulation of Crypto Gambling: A Global Overview
Cryptocurrencies have transformed financial transactions across the world. They have also revolutionized the online gambling industry. However, crypto gambling, using digital currencies for betting, presents challenges for regulating authorities worldwide.
The global approach to regulating crypto gambling varies a great deal. Different countries adopt diverse strategies and have varying attitudes. As such, key regions choose to play their cards differently.
Crypto Gambling Across the World
Let’s look at how several countries and continents navigate the complexities of crypto gambling:
Asia: A Diverse Landscape
Asia, as a whole, is diverse in its approach to crypto gambling regulations. This diversity is due to the continent’s vast differences in cultural, political, and economic factors.
Japan, for example, recognises cryptocurrencies as legal payment methods. As such, crypto gambling in the country is already an established form of online gambling. China, however, has strict bans on cryptocurrencies in general. Besides this, there are also existing restrictions on related activities, including gambling.
Macau, a special administrative region (SAR) of China, differs from the mainland. Like Hong Kong, the “One Country, Two Systems” rule of law means Macau has autonomy in most of its economic and governing activities.
The ownership and transfer of cryptocurrencies in both Macau and Hong Kong do remain unregulated. Private parties can get and transfer cryptocurrencies. As long as those actions don’t contravene AML (Anti-Money Laundering) rules, there won’t be any legal concerns.
There is no legislation on financial payment mechanisms in the gaming sector in either Macau or Hong Kong. Local authorities in both centres do discourage the use of cryptocurrencies, however. It is hence safe to assume that crypto gambling is not actually legal in either territory. Cryptocurrencies are not legal tender in either city-state.
There are still online crypto casinos that accept payment from both regions, though.
Singapore is an Asian country that has opted for a balanced approach to crypto gambling. Crypto casino operators all have to hold licences. Regulatory authorities can hence restrict illicit activities. Most importantly, they want operators to display a commitment to consumer protection.
Australia: A Balanced Approach
As a country, Australia prioritises consumer protection while still embracing innovation. This leads to a somewhat nuanced approach when it comes to regulating crypto gambling.
The country’s Interactive Gambling Act of 2001 governs all online gambling services. This includes regulating crypto gambling. While this outlaws certain forms of interactive gambling, cryptocurrencies aren’t stipulated therein.
The Australian Transaction Reports and Analysis Centre (AUSTRAC) regulates all digital currency exchanges. This stringent regulation minimises money laundering and fraud. Crypto gambling is indirectly impacted, as providers rely on exchanges to convert cryptocurrencies.
Despite this, the vast majority of regulated crypto gambling providers accept a wide variety of cryptocurrencies as payment (source: https://www.bitcoincasinos.com/au/)
To minimise concerns about anonymity, certain Australian jurisdictions need crypto gambling providers to put certain KYC (Know-Your-Customer) and AML procedures in place.
Europe: Striving for Consistency
Europe’s regulatory landscape for crypto gambling involves a patchwork of directives and laws. The European Union’s Sixth Anti-Money Laundering Directive (AMLD6) lays out strict regulations for cryptocurrency-related businesses. These businesses include crypto gambling platforms. Operators have to include KYC and AML measures, like those introduced in Australia.
Some European countries, like Malta, embrace cryptocurrencies and blockchain technology. Malta’s proactive approach encourages many crypto-gambling operations in the country.
Crypto gambling is technically not illegal in the United Kingdom. A legislation backlog caused by Brexit still means the UK is struggling with some specifics. UK casino or sports betting sites that want to accept cryptocurrencies have to apply for approval from the UKGC first. A proviso for approval is that AML checks first get completed.
As the UK’s current Gambling Act goes back to 2005, many parts of crypto gambling are still legally grey areas.
South Africa: Emerging Regulations
In South Africa, an evolving regulatory landscape about crypto gambling exists. The country’s National Gambling Board (NGB) has been cautious to date. There are no evident guidelines on the use of cryptocurrencies for gambling, but online gambling in South Africa is legal.
A growing number of legal online casinos in South Africa accept cryptocurrencies as deposits. South Africa’s Reserve Bank has also shown an active interest in blockchain technology. Over time, it is quite likely that a regulatory framework tailored towards crypto gambling could emerge.
United States: A Patchwork of Regulations
The United States is structurally decentralised, so it presents a complex regulatory environment. Federal and state laws both play their parts in shaping crypto gambling regulations in the US. The federal Unlawful Internet Gambling Enforcement Act (UIGEA) bars gambling operators from accepting payments connected to unlawful Internet gambling. This law applies to both traditional and crypto payments.
Individual states have the authority to legalise and regulate online gambling at a state level, though. Although many haven’t, several states have legalised online sports betting and casinos. Of those, many still don’t recognise cryptocurrencies, however.
Other states, like Nevada, allow casinos to accept certain cryptocurrencies as payment methods. New Jersey and Pennsylvania, among others, also embrace online gambling. Ongoing discussions about legal crypto casinos often get reported in the US.
Crypto Gambling: A Complex Path Forward
The global regulation of crypto gambling is a complex issue and will likely remain so in the distant future. Cryptocurrencies do keep evolving. This fact alone means there are differing philosophies across different regions which will remain until certain changes happen. Worldwide regulators must work to find some balance. Consumer protection from illicit activity and using crypto’s innovation have to align.
Regulatory bodies all over the globe are playing catch-up. They constantly adapt existing laws to encompass some of crypto gambling’s unique challenges. Until regulations restrict the risks of fraud, underage gambling and anonymity, crypto gambling is unlikely to find global acceptance.