Accepting Cryptocurrencies in the IGaming World
7 November 2022
7 November 2022
In 2018, the MGA had published details on its Sandbox Framework for the acceptance of Virtual Financial Assets and Virtual Tokens and the use of Innovative Technology Arrangements (ITAs) such as blockchain technology within the gaming industry.
In this article, we will discuss how operators licensed by the Malta Gaming Authority (‘MGA’) can accept cryptocurrency deposits as an alternative method to traditional finance.
The framework had been divided into two phases:
- The use of DLT assets, or more commonly referred to in the industry as cryptocurrencies, as a method of payment; and
- The use of ITAs within the key technical setup of a licensed operator.
In this article we will focus primarily on the acceptance of cryptocurrency payments as an alternative deposit method from players.
The involvement of cryptocurrencies within the flow may not necessarily involve the requirement to participate in the sandbox framework. The framework specifically lists different scenarios to give a clear guidance on the applicability.
Operators can accept cryptocurrencies either directly or through a payment solution provider (‘PSP’) by which the latter can facilitate the integration process through its solution. The framework further lists the following additional obligations:
- The Operator shall not allow deposits and/or withdrawals before the verification of the player’s control over the wallet.
- The Operator shall not allow players to wager using cryptocurrencies if the verification of the customer details is not completed within 30 days of the first deposit.
- The Operator shall be able to flag any transaction in cases where the total accumulation of monthly deposits equals or exceeds €1,000.
- The Operator should be able to flag any transaction and carry out Customer due diligence where the total accumulation of deposits using cryptocurrencies equals or exceeds €150, similar to the €2,000 threshold for traditional finance.
- The Operator shall consider limits to be the equivalent value in Euro at the conversion rate at the time, the funds deposited reached the operator.
- The Operator shall have in place all limits as specified in the Player Protection Directive. Such limits are distinct from the limits of fiat currency.
Although the above additional requirements may be interpreted to be cumbersome at operational level, some of the requirements can be provided through a PSP, which can be laxed if the PSP is licensed under the VFA act and regulated by the MFSA. In a few words, accepting payment in crypto usually requires the same resources needed to integrate a traditional PSP and therefore presents an opportunity for avantgarde gaming operators to attract a new class of players.
At Radix, we assist operators to understand the requirements and prepare their operations in line with the requirements of the MGA Sandbox framework either through a direct acceptance of cryptocurrencies or through payment solution providers. We can guide operators to choose the best possible solution based on the business needs of the specific entity. Should you wish any additional information please feel free to contact us on [email protected].
Read the PDF version here -https://bit.ly/3DDqmke