The trial period commences for virtual casinos employing cryptocurrency.
At the beginning of 2019, the Maltese Gaming Authority (MGA) started evaluating the licensing of online casinos that accept virtual currencies as payment for betting and gambling. Currently, such casinos are only licensed in Curacao. The MGA will initially test the functionality of these casinos without legislation being too forward-thinking, so they can later create suitable regulations based on their experiences.
Around October the previous year, the MGA announced at the yearly SiGMA trade fair for the Maltese gaming industry that they were going to test online casinos where players can use virtual currencies for a trial period.
The trial phase for DLT bonds commenced on January 1, 2019, which refers to digital means of exchange that are distributed through distributed ledger technology. Distributed ledger technology, or blockchain, is a method of data transfer where information is not obtained from central servers, but synchronized in a diverse network.
Existing casino operators can now apply to the authorities to use virtual currencies as a payment option like any other payment method. Additionally, new online casinos can apply for a license to solely operate with virtual currencies, fostering innovative business models. The MGA may also extend the test period beyond the declared 10 months.
Minimal regulations during the test period
To enable as many new business ideas as possible, operators will have few requirements when using virtual currencies in the first trial phase. At first, all casino operators participating in the test phase will have reporting obligations to the MGA. Additionally, virtual currencies won't be an exception from anti-money laundering measures and player protection requirements.
"Virtual financial assets and the distributed ledger technology (DLT) behind them are a new phenomenon with tremendous potential for change in the age of technology and digital transactions. The hype in the media about their potential, especially in the gaming industry, is enormous. The Maltese Gaming Authority's strategy is to lead the way in this trend and at the same time find reasonable regulation for the issues that have to be handled sensibly." - Heathcliff Farrugia, CEO of the Malta Gaming Authority (MGA)
As with real money transactions, players using virtual currencies must prove ownership of the account or wallet the funds come from. Just like with other payment methods, operators have to verify players' addresses and ages. A monthly limit of €1,000 per player is also set for the trial phase.
Ethereum as the reserve currency
The MGA will not specify which specific virtual currencies are allowed. Instead, each one will go through a test by the Maltese Financial Services Authority (MFSA). The deciding factor is, for example, that the currency is accessible to everyone and not operated by a single organization. The software used for this must be open-source as well as adequately documented.
While online casinos will not be able to exchange one cryptocurrency for another to prevent them from turning into virtual currency exchanges, the cryptocurrency Ethereum will be used as a reserve currency if the exact conversion rate of a virtual currency to euros cannot be determined. More details on the test phase can be found in an MGA working document.
The year of crypto casinos?
EU players can presently only play with virtual currencies in online casinos located in Curacao. Providers like Zipett, which accept Bitcoin or even operate entirely with virtual currencies, already exist there. However, most EU-visited online casinos are established in Malta. The island nation sees the iGaming sector and its related technology industries as promising economic areas concerning the future.
"I would like to express my gratitude to everyone involved in this project who helped us reach this critical stage. Innovation stands at the heart of our strategy. Our regulations are designed to enable economic growth and innovation in the gaming sector while ensuring necessary security against social and criminal risks." - Heathcliff Farrugia, CEO of the Maltese Gaming Authority (MGA)
If the first phase of the trial is successful, it may be expanded in a second stage. Once the legislator is content with the results, it is anticipated that they'll initiate corresponding legislation. The first official crypto casinos based in Malta could possibly serve the European market in 2019.
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Source: www.onlinecasinosdeutschland.com
