Is Gambling With Cryptocurrency Actually Safe and Legal?
Gambling with cryptocurrency is among the latest trends in the online casino industry. Crypto gambling has been heavily relying on Bitcoin and other cryptocurrencies. In fact, if you add the market capitalization of the top 22 cryptocurrencies used in online crypto casinos, you'll get more than $150 million.
However, is crypto gambling legal? If you're looking to wager on the biggest casino games around, we'll answer this question below as we examine the lawfulness and use of cryptocurrencies in casino games. Additionally, we'll also observe the legality of bitcoin casinos (such as Pelaa Casino). So, is Bitcoin gambling legal in your jurisdiction? Different countries and territories have various regulations about using Bitcoin or other crypto coins in gambling sites. Let's begin.
Gambling With Cryptocurrency: How Different Regions Tackle This Issue
We'll begin our analysis by observing the differing regulations on crypto gambling in various regions and countries worldwide. We'll observe:
- Bitcoin gambling in America
- Bitcoin casinos in the UK
- Gambling with cryptocurrency in the rest of the world
Bitcoin Gambling in America
Bitcoin is legal in the US and is considered a full-fledged currency by the IRS for transactions it can tax. When using Bitcoin for gambling games, there are no direct laws that make cryptocurrency gambling illegal.
Therefore, this cryptocurrency is usable in all gambling sites that accept it, provided an individual does not use Bitcoin for legal transactions (as was the case with ICE agents who arrested an individual for laundering money this way). However, only four US states permit gambling with cryptocurrency to their residents.
The first US state ever to legalize online gambling in 2012 was Delaware. The only condition was that residents only play at approved online casinos. Nevada, which hosts the WSOP poker tournament, follows Delaware in legalizing online gaming due to overturning The Federal Wire Wager Act. New Jersey decided to allow online gambling in 2013 as a way to tap into the lucrative gambling market. Lastly, Pennsylvania's state office also amended its gambling laws to allow licensed casino sites within the state.
Bitcoin Casinos in the United Kingdom
The United Kingdom Gaming Commission (UKGC) recognizes cryptocurrency, making gambling with cryptocurrency easier in the UK. UKGC-licensed gambling websites allow residents to use Bitcoin and other cryptocurrencies. The organization expects licensed online gambling sites to adhere to its standards regarding anti-laundering practices and problem gambling awareness, among other things.
However, digital transactions remain unregulated, unlike cryptocurrency gambling sites. Any online gamblers who use digital currency should keep this fact in mind. Officials warn people about the potential risks associated with virtual currencies, such as transactions' irreversibility and permanent nature.
The continuous volatility of cryptocurrency prices is another risk, as no central authority can control it. The UK government office has been trying to regulate cryptocurrency since 2015.
Bitcoin Gambling in the Rest of the World
Gambling with cryptocurrency on gambling sites in Malta is not as easy as it is in the UK. Despite the popularity of Bitcoin, venues licensed by the Malta Gaming Authority do not accept cryptocurrency deposits. Officials from the MGA are currently working to allow licensed casinos to accept cryptocurrency assets via the Sandbox Framework Initiative.
Gibraltar took a neutral stance on cryptocurrency when the country's Gambling Commission allowed crypto gambling sites. The Digital Ledger Technology Regulatory Framework (DLT) allows online Bitcoin gambling. The organization still requires licensed casinos to adhere to specific guidelines, such as giving accurate and current information to their customers.
Other countries that accept Bitcoin are also increasing in number, such as Hong Kong, which established its cryptocurrency regulation in 2020. Regardless, it is challenging to regulate cryptocurrencies because some are non-securities, allowing them to remain in the grey area of the law. Hong Kong's Securities and Futures Commission has opened the doors to cryptocurrency gambling in the country by introducing digital currency regulations.
How Does Bitcoin Work?
When looking at gambling with cryptocurrency, it's wise to understand how virtual currencies work. Cryptocurrencies are named after the complex mathematical cryptography used to verify transactions on the bitcoin network, making bitcoin decentralized.
In other words, there is no mitigating authority, and bitcoin can be controlled only by one person or a small number of people. This idea of decentralization makes it so tricky for crypto casinos to be regulated. There is no Federal Reserve or the IRS to which bitcoin can report to. Instead, the network operates thanks to a global network of computers, and transactions are logged into a public ledger.
Pseudo anonymous is another term used to describe Bitcoin, meaning that your money is not linked to any personally identifiable information. Traditional banks often send personal information, such as your name, address, and bank details with every transaction.
However, sending such information is not necessary with bitcoin. When you make a bitcoin transaction, your wallet address is the only thing you share. This address is a string of numbers or letters telling the network where money can be taken from and where it should be sent. This type of setup makes bitcoin safer, especially for online transactions.
Bitcoin is also not subject to bank fees when it comes to gambling with cryptocurrency. This characteristic means it can move from any currency or part of the world without suffering bank fees. Simultaneously, bitcoin does not succumb to fluctuations in exchange rates. Therefore, your bankroll remains more resilient and flexible, and it's also impossible to know where the funds are coming from or going to.
KYC
Each regulation office ensures that its licensed casinos follow their rules regarding cryptocurrency handling. One example is the Know Your Customer policy, which requires that patrons verify their identity before opening an account. KYC rules enable authorities to monitor suspicious transactions and prevent money laundering using cryptocurrencies. Although each territory is responsible for the operation of the casinos under its jurisdiction and how they advertise their business, there are no regulatory offices that can regulate cryptocurrency transactions.
Transaction Oversight
When it comes to gambling with cryptocurrency, Bitcoin and other virtual currencies don't have a central office that oversees all transactions. If a player sends their digital coins to an incorrect address, neither the office nor the player can reverse it. The prices can fluctuate daily, so a player could win twice as much or lose half their winnings within a matter of days.
Cryptogaming Is Both Risky and Profitable
Since crypto-gambling regulations remain the wild west of online gambling, casino players should be cautious about using virtual currencies. You can verify the legitimacy of any online casino and its license to ensure your safety. If your funds are with a licensed operator who can compensate for any losses due to their error, they will still be secure.
The legality and regulations of gambling with cryptocurrency depend on the operators, their business processes, and the jurisdiction from which you play. It is critical to remember that no authority or office can regulate the transactions or value of crypto coins. Such proverbial freedom is what cryptocurrencies are all about. Despite the risks, digital currency allows players in various countries to play table games, slots, blackjack, poker, and other gambling attractions.
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