UKGC iGaming Licensees May Use “Digital Currencies” Post-Oct 31st

Home » Poker News » UKGC iGaming Licensees May Use “Digital Currencies” Post-Oct 31st

Monday, August 29th, 2016 | Written by Shane Larson

As the world of online gaming evolves, governments are being forced to reevaluate their laws and regulations in order to ensure that consumers remain protected, and so that sites can continue to develop new technologies and offer its customers new types of games. One recent example came at the end of July this year, after the United Kingdom Gambling Commission (UKGC) announced changes to the country’s License Conditions and Codes of Practice (LCCP).

As a result, starting on October 31, 2016, online gambling operators licensed by the UKGC will legally be permitted to accept digital currencies as a form of payment. The changes, however, do require operators to take a number of precautions in order to prevent money laundering through their sites.

Defining Cash Equivalents

The specific language in the announcement from the UKGC is that “cash equivalents” will be acceptable forms of payment at online gambling sites once the change in policy goes into effect. But what exactly is a cash equivalent? The answer is basically any currency that has an associated cash value that is not cash, which will therefore pave the way for casino sites to accept the digital-currency Bitcoin. In addition, e-sports skins like CS:GO may also fall under this umbrella.

A Good Step Forward

With the changes made to the law, the United Kingdom Gambling Commission continues to show that it is forward-thinking and flexible when it comes to online gaming. The change also leaves room for gaming sites to continue to innovate and develop new forms of play, while still being able to adhere to legislative requirements.

While there are measures in place to prevent money laundering, under the law operators who apply for licensing are responsible for fully understanding the regulations, and complying with them in order to avoid fines, penalties, and continuing operating legally. So while the UKGC has a soft touch, they do enforce laws strictly.

Anti-Money Laundering Protections in Place

The changes put forward by the UKGC will keep the country’s ‘Know Your Customer’ rule in place, basically meaning that any licensed operator is obligated to take the proper steps to identify all players. Therefore, they must develop a system of player identification and authentication that uses best practices to ensure that their sites are not sued for money laundering.

E-Sports is relatively new to the online gaming world, though, and most sites have little to no experience drafting these types of plans and implementing them. Because the threat of fines and other penalties is very real, it will likely be some time before we see any e-sports operators take the steps necessary to become licensed in the UK with a setup that would use E-Sports skins as a form of currency. It will take some time for operators to develop the well-thought out, comprehensive strategies that are necessary to ensure compliance.

TonyBet Begins Accepting Bitcoin

In the meantime, last week TonyBet.com, which is owned by Member of European Parliament (MEP), Tony Guoga, became one of the first recognizable online gambling brands to start accepting the crypto-currency called Bitcoin. Through its partnership with SpectroCoin e-wallet, the site’s customers can now make deposits and withdrawals using Bitcoin, while in-play their Bitcoins are converted into regular currencies.

According to Tonybet.com, the impact of allowing Bitcoin transactions has had an instant and profound impact on the number of new sign-ups at the site, especially amongst players from Asian countries. Commenting on the development, Tonybet.com spokesman Warren Lush said:

“We’re always keeping up with the latest digital innovations in order to adapt them to our online gaming platform. With the introduction of Bitcoin deposits we saw a dramatic increase in recreational punters and poker players especially from the Asian countries who have been struggling to transfer their funds before.”

An extra benefit of using Bitcoin for its customers is that it will allow them to speculate on the fluctuating value of the digital currency, whose share price was worth just $13 at the beginning of 2013, but by the end of the same year soared to $1,082. The currency is currently trading at $577.

“What’s more is that partnering up with SpectroCoin we not only opened our online sportsbook, casino and poker site to those who wanted to use their digital currency for online gambling, but also encouraged customers to exploit the advantages of using Bitcoin,” explained Lush.