Lewis Silkin’s Wendy Saunders: Gambling in Crypto: The Next Revolution?

If the first technological revolution in gambling took place in the 1990s with the intense development of virtual gambling, could cryptocurrencies have the potential to lead to a proper revolution in gambling?

Before rushing to create new gambling products with cryptocurrencies or to enter cryptocurrency payments, let's think about how this may be reflected in the existing legal and normative foundations, and what are all the possibilities of problems and skills that may result.

Risk Assessments and Customer Due Diligence

It is good that attackers have every chance to profit from their atrocities and apply gambling and gambling websites for cryptocurrency laundering. Gambling operators that decide to use cryptocurrencies as a means of payment for gambling roles should update their own risk assessment to take into account the new dangers of using their business for money laundering and terrorist financing.

Recall that casinos are considered regulated businesses under the Anti-Money Laundering Act (AML). Other gambling operators apply the Joint Act to protect against money laundering. All licensors (except those that include technical support licenses for slot machines and gambling software) must align with their own recognized standards:

• space} Assess the risk of using the business for money laundering and terrorist financing.
• space} Implement appropriate policies, controls and procedures (PCP) to prevent money laundering and terrorist financing.
• space} Ensure the effective implementation and maintenance of PPC.

As well as conducting risk assessments, most external gaming licensees are required to receive and examine information to establish the identity of purchasers before they are allowed to act in the games. This information includes, but is not limited to, the purchaser's name, address and date of birth. Gambling operators have every opportunity to fulfil their obligation to identify the owner of an electronic wallet used to play with cryptocurrency. The Gambling Commission, in its Guidance for Remote and Non-Remote Casinos (GC Guidance) to prevent money laundering and combat terrorist financing, has stated that a high risk that applies specifically to remote casinos is the number of cryptocurrencies made in an electronic wallet.

The GC-manual is also a strict transaction test, and in case of need, the transaction is a casino-casino, a profile that gives a risk and risks, and a fund source test, and the immutable. Investigate the request for prediction. When using cryptocurrencies, there is a high possibility that an attacker may apply an anonymization service, switch, and a mixer to prevent the source of funding, so that the source of funding is identified. When using the cryptocurrency as a payment method, the casino must pay close attention to how to fulfill the promise of Under/FT.

Finally, if cryptocurrency is adopted as a way to pay in gambling, it is likely that a notification to the Gambling Committee will be required, especially if there is a significant effect on license disposal and management system.

Due Diligence on the Crypto Itself

The Gambling Committee reminds the operators in guidance and advice (GC-advice) in GC-operators (excluding casino pelators) for promises and obligations according to the 2002 Criminal Income Law (POCA). POCA is a specific number of criminal atrocities that are used to the criminal's income from all criminals, if you understand or suspect that your assets are considered a crime. Masu. In short, criminal assets are assets that give people from criminal acts or benefit. In fact, gambling operators have the obligation to doubt not accepting bets, bets, or betting methods suggesting that they can benefit from atrocities.

The specific conditions related to this problem are possible under the approval conditions related to the payment method, and the identified license is only by introducing the payment offer through the provider of the approved payment offer. There are all paid opportunities. The transfer of an appropriate payment offer is regarded as a criminal atrocities, and compliance with this cognitive situation is the property acquired by a payment method through a criminal method, a corresponding intermediary. Provided by Licensei.

What does this mean in the context of cryptocurrency? The Financial Arrivals Bureau (FCA) has announced an instruction on its own policy statement on 19/22, who is likely to regulate which cryptographic certificate and which encryption certificates exceed the regulation. Overall, FCA emphasizes three categories of encryption assets: securities token, power tool token, and no n-regulated tokens.

It is necessary to consider what cipher assets belong to which category. If a token is regulated, implementing a specific work related to these tokens without appropriate authority may constitution, and the cryptocurrencies acquired as a result of such a crime. , Appeared criminal assets. Furthermore, if it is published by a company that is active as a provider who proposes the exchange of cryptographic assets without making appropriate registration in accordance with the Money Laundering Prevention Law, including the fact that encryption assets are not regulated, such cipher. Assets will earn exempted income. This basically means that gambling operators have the ability to perform strict tests before gambling conducts new cryptocation assets.

Additional Registration Needed under the MLRs 2017?

Since January 2020, under the influence of MLRS 2017, the fifth EU command related to money laundering has been introduced in England, and a supplementary type company that covers the provider for ordering the order of the actor-actor exchange and the podium order. It was made.

Crypto-Exchange proposal suppliers include companies that operate in their own context:

• Space} Crypto assets and funds or funds and cryptographic assets, organizationalization or agreement;
• Take measures to replace, organize, or replace another cryptographic transaction with another cryptographic transaction.
• Use a machine that uses an automated process to exchange encryption assets, funds or funds and encrypted assets.
  • Includes when the company provides any of the abov e-mentioned offers as developers or to the issuers of related encryption assets.

  Guardian Portfolio providers include companies that make proposals to ensure security, security and management within their own work.

  • Space] Provide encrypted assets on behalf of customers.
  • Alternatively, if a {Space} encryption key is suggested, a private cryptographic key is provided for its own buyers to store, accumulate, and relocate cryptographic assets.

  Therefore, when providing new products and new proposals related to cryptocurrency, gambling operators, from the preparation stage to add to the FCA as the cryptocurrency exchange company or the Casodian Wallet provider, these new products and new products. It is necessary to check if there is a proposal. It is interesting that the FCA published a memorandum signed with the Gambling Committee in July 2021.

  Pricing, Payout, Management of Stakes Held in Crypto

  Even if a gambling operator has implemented appropriate controls to ensure that it does not inadvertently accept the proceeds of crime by accepting cryptocurrencies and has confirmed whether it needs to further register with the FCA under the Money Laundering Act, the problems may not end there. Cryptocurrencies are generally characterised by high volatility. What problems arise from this and how should they be addressed?

  Licensees must comply with conditions on the protection of customer funds, such as segregation of funds and disclosure of information on the protection of funds in the event of insolvency. However, there are no provisions covering problems arising from volatility potentially related to customer funds. Such issues must be resolved in the gaming contract between the operator and the customer.

  Such contracts are subject to the Consumer Rights Act 2015 (CRA) and contracts concluded before 1 October 2015 are subject to the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR). However, the assessment of fairness under the CRA and UTCCR generally does not extend to the reasonableness or sufficiency of the price or consideration. When creating or revising terms and conditions regarding prizes, gambling operators must take into account the Second Gambling Commission's licensing objective of "ensuring fair and open gambling", as well as the licensing conditions regarding fair and transparent terms and practices. For cryptocurrencies with high volatility, more precise and detailed descriptions may be required, for example, regarding the timing and calculation method of payouts and appropriate liability for processing delays, to avoid costly contractual disputes.

  Conclusion

  In conclusion, gaming companies that make products or accept payments in cryptocurrencies should pay attention to the following key points:

  • Review AML and PCP risk assessments to adequately cover risks related to cryptocurrencies.
  • Do we need to carry out due diligence on all crypto assets to ensure they do not constitute criminal property?
  • Whether new products or business models need to be registered with the FCA as a crypto asset exchange provider or custodial wallet provider.
  • Review trading terms to ensure sufficient price transparency and appropriate allocation of liability, which may arise from the volatility inherent in many crypto assets.

  This article was written by Wendy Saunders, Legal Director at law firm Lewis Silkin.

  

  Elim Poon - Journalist, Creative Writer

  Last modified: 27.08.2024

  If the first technological revolution in gambling occurred in the s with an explosion in virtual gambling, might crypto bring about the next. Nick Bogdanovich is no longer part of the Caesars Sports family as Caesars Entertainment decided to "go in a different direction.". Lewis Silkin's Wendy Saunders: Gambling in Crypto: The Next Revolution? If the first technological revolution in gambling occurred in the s with an.