
Why Major Casino Regulators Hesitate to License Crypto-Exclusive Platforms
Crypto casinos are platforms that allow gamblers to use cryptocurrencies like Bitcoin Casinos. They are incredibly popular today for many reasons. For starters, they offer unmatched privacy and anonymity to avid casino gamers. Unfortunately, most crypto-exclusive casinos are not regulated by top-tier authorities.
So, why don’t major regulators license crypto-only casinos? The answer revolves around a variety of issues, including non-existent KYC procedures and the anonymous nature of cryptocurrencies.
We’ve explored the main reasons why most major regulators don’t license crypto-exclusive casinos in the sections below.
The Key Concerns for Regulators on Bitcoin Casinos
When it comes to Bitcoin casinos, regulators face many risks and challenges. This is particularly true since crypto’s primary pillars are grounded on global reach, decentralization, and anonymity. Let’s explore the key issues that make the regulation of BTC casinos a herculean endeavour.
Transparency issues
Bitcoin offers a level of transparency through its blockchain technology, but this transparency is limited to transaction data rather than user identity. All BTC transactions are public and traceable. Today, you can enter anybody’s digital wallet address and view their transaction history. Moreover, once a BTC transaction is confirmed, it can’t be deleted or altered; it’s stored permanently on the blockchain.
This level of transparency should make things easier for regulators, but it doesn’t. Why? First, although Bitcoin transactions are traceable, you can only trace them back to the users’ wallet addresses. The issue here is that many BTC enthusiasts use anonymous wallets that can’t be traced back to them. Since identifying BTC users is almost impossible, regulators have a hard time regulating BTC casinos and their users.
Compliance challenges
Standard online casinos have strict KYC and AML protocols. KYC is used to identify who you are as a player. It’s the reason gambling platforms ask you to provide your legal name, residential address, date of birth, etc. It also demands you share documents for verifying your identity and location, like your driver’s license and recent bank statement. On the other hand, AML prevents you from engaging in illegal activities like fraud by limiting your deposits, withdrawals, etc.
The problem is most Bitcoin casinos support anonymous gambling. They don’t ask their customers to share sensitive details and documents. The only information that BTC casinos ask for is the player’s preferred username and email. Since these platforms don’t collect personal information, regulating them is quite challenging.
Money laundering and fraud risks
As we’ve established before, Bitcoin transactions are pseudonymous. Since they don’t involve details, criminals often rely on them. Some criminals today exploit BTC casinos to launder dirty money. They just create anonymous accounts, deposit crypto, hit the minimal wager threshold, and withdraw the rest of their assets as “clean money.”
Since the deposits and withdrawals in BTC gambling platforms are made by anonymous players, regulators have a hard time verifying whether the funds are from illegal sources or activities. To make matters worse, BTC casinos have global accessibility. Players from different regions can access these platforms irrespective of the gambling laws in their region.
How this Impacts Casino Players
You now have a clear understanding of why crypto casinos are hard to regulate. Now the next question is how this issue will affect you as an ardent casino gamer. Let’s explore this crucial topic in detail.
Volatility of cryptocurrencies
Cryptocurrencies are highly volatile. The price of an asset like Bitcoin can fluctuate wildly within a day, primarily due to changing supply/demand and recent developments in the crypto scene. Remember in 2021 when a couple of tweets from Elon Musk caused the price of 1 BTC to drop from nearly $60,000 to below $40,000? That is how volatile digital assets are.
The volatility of cryptocurrencies can either benefit or undermine your online gambling experience. For instance, if you buy crypto worth $100 for gambling purposes and the asset’s value increases, your asset’s worth will be higher by the time you decide to cash. Unfortunately, the opposite is also true, and your assets might lose their worth by a considerable margin within the blink of an eye.
Chargebacks and dispute resolution
While gambling on a conventional online casino, you can initiate a chargeback whenever you encounter issues like fraud or non-payment of winnings. Moreover, you can use internal or external dispute resolution mechanisms whenever you have a pertinent issue like discrepancies in game outcomes, failed payouts, and sudden account suspensions.
Unfortunately, crypto-exclusive casinos do not offer the same perks for playing your favorite casino games. Transactions that involve digital currencies are irreversible, so once crypto has been successfully transferred or used, it can’t be reclaimed. Additionally, due to a lack of extensive regulation, most crypto casinos lack structured dispute resolution processes.
Trust and fairness
Proper regulation encourages service providers to be fair and transparent about their policies. That said, most crypto-exclusive casinos are not regulated and don’t see the need to share with players information regarding crucial aspects like operating procedures. Some take this opportunity to rig and manipulate their games.
What’s more, due to a lack of intensive regulation and oversight, some crypto-gambling platforms set unclear terms and conditions. That is more so where rewards, bonuses, and promotions are involved. Such service providers have it harder for savvy players to trust crypto-exclusive casinos, despite the abundance of reputable and reliable platforms. Despite these challenges, some of these casinos operate responsibly, adhering to self-imposed standards and transparency to build trust with players.
How some less strict regulators are approaching crypto casinos
Note that, despite regulation being an issue, the best crypto casinos are licensed by known authorities like the Curacao Gaming Commission (CGA) and the Anjouan Offshore Finance Authority (AOFA). Such regulators take a less rigorous approach compared to those that focus on conventional online casinos exclusively. This has encouraged most crypto gambling casinos to base their operations in friendlier jurisdictions like Curacao and Anjouan.
Since CGA, AOFA, and similar authorities don’t exercise stringent regulatory oversight on crypto casinos, you should expect less protection when interacting with these platforms. You should also do all you can to ascertain every crypto casino’s legitimacy before signing up.
What the Future Holds for Crypto-Exclusive Casino Licensing
When it comes to regulating crypto casinos, regulators face myriad challenges. For starters, these service providers lack strict KYC protocols, and most crypto transactions are anonymous. Such aspects make the identification and prevention of illegal activities like fraud almost impossible.
But things could be better. Evolving regulatory frameworks will eventually play a significant role in facilitating fair play, uncompromised consumer protection, and more. But before these become standard in the world of online gambling, we encourage you to vet every casino’s licensing status and reputation before signing up.