When it comes to Bitcoin, the main concern expressed by regulators is its support of strong anonymity. After exchanging fiat money for Bitcoins, your digital money is being stored in a virtual wallet protected with a private key. From this moment on, it becomes pretty much impossible to trace the owner of the Bitcoins, which is meant to protect user’s identity.
On the other hand, fiat money is way easier to trace via bank accounts or, let’s say, credit card records. This way, regulators have the opportunity to find out where the money has been transferred to. By monitoring bank transfers, the governments keep track of casino’s activity and implements rules and regulations accordingly.
It becomes obvious, that online casinos accepting only fiat money isn’t the best solution in regard to maintaining user’s privacy. Bitcoin, on the contrary, makes it hard to track the transactions, which leads to our question: does Bitcoin make the gambling regulation ineffective?
What about the law?
As of today, there aren’t any particular laws that regulate the gambling with Bitcoins. Therefore, the cryptocurrency gambling industry is pretty much left in a grey area. In general, it is accepted that Bitcoin gambling is allowed in the countries where both Bitcoin and online gambling have been legalized.
But, the residents of other countries where one of those factors is prohibited still find a way to gamble with Bitcoins. In such cases, the current regulation is proven to be ineffective in the face of Bitcoin. For example, gambling via offshore websites isn’t allowed in Norway, yet the players still find a way to do it.
Possible dangers for the industry
The main purpose of monitoring gambling activities is to prevent violations like, for example, money laundering. If the regulators spot any suspicious activity, they can trace the transaction and confirm whether the law has been broken. When it comes to Bitcoin transactions, their hands are tied once again.
Another reason regulators insist on monitoring gambling activities is the match fixing. Tracing the source of the funds to the results makes it easy for them to tell if it happened. However, using Bitcoins for the same purpose allows the perpetrators to be way more elusive.
What actions can be taken by regulators?
The regulators know about the potential dangers to the industry. This is why they are trying to implement new improved policies in order to protect the users. In some countries, the casino operators are obliged to screen the players and establish their identities.
So, is the regulation needed?
The times when Bitcoin was seen as the “currency of the criminals” are long gone. Today, more and more large businesses of all kind see cryptocurrency as a safe and trusted payment method.
Modern regulation strategies may be ineffective for Bitcoin gambling, but it doesn’t mean that all regulations need to be eliminated completely. Appropriate and effective laws will help to avoid potential dangers to the gambling industry and become a significant contribution to any attempts to legalize Bitcoin in the future.