Bitcoin and cryptocurrency are finding implementation in various industries. The flexibility that it offers to transactions makes it suitable for payment processes, especially those that are based on the internet. The gambling industry falls into this category, as online casinos are growing at a very fast rate. Even physical casinos have started adapting internet procedures, especially in making payments. In this post, we will be taking a look at how crypto gambling is regulated around the world.
If you are involved with online gambling, or have attempted to go through a gambling site, you may have been confronted with one of these scenarios:
- Denied access
- Your country of residence is not permitted to participate
The reason why you would encounter any of the above mentioned scenarios is as a result of regulation.
Different countries of the world have their own particular regulations for the gambling industry. In some cases, the same regulations cut across both physical and online gambling. But our interest in this post is to consider how crypto gambling Is regulated around the world.
Crypto gambling can be divided into two different groups. There is off-chain crypto gambling, and on-chain crypto gambling. Now we will explain these two categories of crypto gambling.
Off-Chain Crypto Gambling
Off-chain crypto gambling involves the use of a cryptocurrency and blockchain network strictly for settling payments. Platforms that run this way accept the fiat value that is needed to participate in gaming activities, using cryptocurrencies. Most of them use custodial wallets for these services, and can make payouts either in fiat or cryptocurrencies.
These kinds of crypto gambling platforms are not necessarily provable, and this process is also not restricted to online crypto gampling platforms alone. Therefore, the normal regulations that follow gambling platforms are usually adapted under such circumstances. Some jurisdictions that already have independent regulations for cryptocurrencies do find ways of merging the two. This gives a more robust regulation for crypto gambling in such regions.
On-Chain Crypto Gambling
This gambling system involves the implementation of a decentralized blockchain in the actual gaming processes. This is achieved by using smart contracts that comprise of decentralized applications (dApps). This is the category of crypto gambling platforms that are said to be provable, as the processes are usually recorded on a blockchain network. On-chain casinos do not need centralized servers.
How Do Governments Regulate Crypto Gambling?
The traditional way of regulating online gambling usually involves the banning of IP addresses. This is how most governments enforce their regulatory processes. Doing this on off-chain casinos is much easier because of how centralized the systems are. To escape such bans, users sometimes revert to the use of virtual servers to route their IP addresses through unaffected jurisdictions.
To achieve this on on-chain casinos is not as easy as it is with off-chain casinos. The reason for this is simple: the decentralization of the platform provides a network that is not bound by a static IP address. Rather, the network is hosted on several participating computers from different parts of the world. This is why you will discover that the number of countries that currently regulate crypto gambling around the world are few, compared to those where online gambling is regulated.
In Which Countries Is Crypto Gambling Regulated?
Here is a list of the countries where crypto gambling is currently regulated: United Kingdom, Italy, The Netherlands, Greece, Poland and Belgium. As explained above, the regulation that extends to crypto gambling in most of these countries comes from how cryptocurrencies are perceived.
Regions where Bitcoin and other cryptocurrencies are not considered as a legal means of payment automatically rules them out as being implementable for gambling. It is this perception, and how crypto is qualified, that is the concern in Japan’s intended regulatory move towards online gambling. An idea that is still in the works. However the outcome of this process will become another contribution towards how crypto gambling is regulated around the world.