The nation of Malta – long a pioneer in internet gambling – is quickly moving ahead with plans to allow for the legal use of bitcoin and other cryptocurrencies at online casinos.
In a new interview, Joseph Cuschieri, executive chairman of the Malta Gaming Authority (MGA), which oversees the country's land-based and online casinos, said that the regulatory body has commissioned a detailed technical study to explore the best path forward for legal and regulated cryptocurrency use in gambling.
"We believe that cryptocurrencies and blockchain technologies are emerging innovations which need analysis and an assessment of the risks and opportunities for potential adoption in the gaming sector," he said.
Cuschieri told CoinDesk:
"The shape and form of the framework governing cryptocurrencies will be announced in due course and once the risk assessment is carried out. Once the results of the study are evaluated, the MGA will make its position official on how cryptocurrencies will be adopted."
The agency expects to detail the findings from its study in the fourth quarter of 2017.
A piece of the puzzle
Cuschieri's comments come on the heels of a recently released white paper by the MGA exploring how its legal and regulatory approach to online gambling must evolve to keep pace with technology.
One of the report's conclusions is that cryptocurrencies should be embraced for purposes of competitive advantage, and because more widespread use and application of these technologies is certain.
"The Authority is cognizant that the rise of crypto-currencies is inevitable. Conscious of the need to remain at the forefront of innovation and to keep up with new developments in technology and the industry ... the Authority is committed to allow the use of cryptocurrencies by its licensees in the immediate future."
The push for legal and regulated cryptocurrency gambling is a component of a broader, aggressive push by the Maltese government to develop a blockchain strategy and position itself at the forefront of the technology's adoption.
"We must be on the frontline in embracing this crucial innovation, and we cannot just wait for others to take action and copy them. We must be the ones that others copy," Prime Minister Joseph Muscat said in April when the draft strategy was first revealed.
Silvio Schembri, Malta's parliamentary secretary for digital economy, told local press this week that the island is committed to rolling out distributed ledger technology throughout the public sector and attracting blockchain companies.
"We've heard enough about the opportunities posed by blockchain and it's now time to put words into action to create new opportunities for both citizens and the economy. It's my priority to turn this vision into a reality."
But creating a regulatory framework for the fast-moving technology requires balancing the careful study of consumer protection and anti-money laundering implications with competitive pressures from other jurisdictions.
Bitmalta, a local cryptocurrency advocacy group, applauded the MGA's initiative, but called upon the agency to move quickly in order to keep pace with other nations looking at legalized cryptocurrency gambling.
The group said in a statement:
"Other jurisdictions such as the UK have already legislated in favor of the use of cryptocurrencies by remote gaming operators, and unless Malta wants to play second fiddle to such other jurisdictions, it should ramp up its efforts to embrace such technologies."
Cuschieri insisted that while a key goal is to attract new operators and investment to the island, he wouldn't be welcoming in just anybody.
"Our key priority is always the integrity of our jurisdiction. Whoever does not meet our fit and proper, regulatory, anti-money laundering and consumer protection standards is not welcome in Malta," he said.
Out of the shadows
Bitcoin and cryptocurrency casinos have been one of the predominant applications of blockchain technology since its invention a decade ago, but many of these entities have operated out of unregulated or lightly regulated jurisdictions – raising concerns about their use by unsavory actors.
Cuschieri reckons that the most straightforward way to tame illicit behavior is to bring these types of casinos out of the shadows.
"We firmly believe that the best way to control gambling, prevent criminal activity and protect players is through robust and effective regulation and enforcement," he said, adding:
"Prohibition or barriers only lead to underground activities and black market operations. The latter is not in the best interest of players and the sector in general. That is why it is best to establish transparent regulatory regimes so that we bring integrity and trust into the system."
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