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Online betting is on the rise and cryptocurrency has been one of the most crucial aspects of that. Compared to fiat currency, where you will need to go through a regulatory process every step of the way, cryptocurrencies are fast and simple. And that’s why so many people gravitate towards it.
The quick and fast transactions, easy deposits, and withdrawals have made currencies like Bitcoin very prevalent on betting platforms. However, there are consequences to this as well!
Due to the nature of crypto being anonymous and its lack of information to track the user, regulations are heavily outdated in this matter. As a result, many unique challenges threaten the existence of cryptocurrency betting sites. Let’s get into some of these challenges below, where you can also learn how to overcome them.
Regulatory Challenges Related to Cryptocurrency Betting
Cryptocurrency is a totally different type of monetary transaction. As a result, the regulatory problems are even more complicated than those in other technology disciplines.
Here are the primary challenges of cryptocurrency betting:
(source: cryptobetting.com)
Anonymity and Legal Compliance
One of the main reasons people use cryptocurrency is anonymity. However, this aspect brings several issues to regulatory compliance.
This case has a significant impact on anti-money laundering (AML) and know-your-customer (KYC) legislation. This is how it works:
Online casinos that accept cryptocurrency transactions give their patrons anonymity since blockchain transactions do not include the sender’s or receiver’s personal information. This makes it difficult for authorities to enforce legislation and identify individuals who may be engaged in unlawful activity.
Regulatory Uncertainty and Jurisdictional Issues
Not all countries have the same laws and regulations regarding crypto betting. In some countries, such websites are outright banned, while other places of the world have legalized them with regulations.
In the United States, there is no specific federal legislation regarding cryptocurrency gambling. Instead, the rules depend on different states. Such inconsistency in jurisdictional regulation leads to a lot of issues and confusion.
Most online gambling websites were made with fiat currency in mind. That’s why, with the arrival of cryptocurrency, there is now a grey area that people can take advantage of due to the lack of proper legislation.
How to Overcome These Challenges
With crypto betting becoming more and more popular, there is no alternative to overcoming the challenges that people and operators face due to the use of such currency. Here are a few strategies that can help:
Enhance KYC and AML Compliance
Cryptocurrency betting platforms should have a set of robust procedures that include Know Your Customer (KYC) and Anti-Money Laundering (AML). This makes it easier to verify the identity of users and look for suspicious activities.
This step will remove the problem associated with anonymity when using cryptocurrency, as the platform can have information on who the user is.
Navigate State-by-State Regulations
Crypto betting rules differ from state to state in the US and also is pretty different across the globe. That’s why it’s very important for the operators to understand and comply with the law of a specific state instead of having a cookie-cutter policy for the entire country.
In this case, obtaining a license in states where online gambling is regulated can be a start. This measure also includes preventing people from using the platform in states where online betting is not legal.
Investing in Technology for Compliance and Monitoring
What happens when the regulators don’t have the most cutting-edge technology that can ensure safety for crypto betting platforms? You build your own!
By investing in technology that can help track transactions and other aspects of regulatory measures, you can create tools that can help the entire industry.
Leverage Blockchain for Transparency and Security
One of the greatest things about blockchain is transparency where anyone can see transactions between accounts. This feature can be used to gather transaction records and other crucial data, helping platforms gather evidence that shows compliance with AML regulations.
Final Note
Even though cryptocurrency has existed for several years now, we are still behind in creating proper regulatory measures that can ensure safe transactions without any criminal activity.
Legislators and online betting platforms are responsible for working together to secure a positive outcome where users can safely go into crypto betting sites.
We are in the early stage of achieving a proper relationship between regulation and crypto betting. Until then, we have to keep trying.