Why Aren’t Crypto Casinos Licensed in the United Kingdom?

Crypto Casinos Not Licensed in the United Kingdom?

Cryptocurrencies have recently sparked much interest across various industries, including online gambling.

Yet, the Gambling Commission finds itself at a crossroads regarding the licensing and regulation of crypto casinos that are currently prohibited in the UK.

This stance raises important questions about regulatory consistency and economic potential.

Current Regulatory Landscape

The UK has adopted a cautious approach to integrating cryptocurrencies into its financial and commercial frameworks.

While crypto exchanges and digital wallets are permitted, using cryptocurrencies for gambling falls under the legal grey area.

The UKGC doesn't permit its licensees to accept it as a payment option.

To make matters worse, an increasing number of UK banks are blanket banning cryptocurrency transactions.

Consequently, crypto casinos face substantial hurdles in obtaining licensing from the Gambling Commission.

UK players looking to gamble with cryptocurrencies must use offshore platforms that operate outside UK regulatory control.

The question remains: why? 

 5 Reasons the UKGC Doesn't License Crypto Casinos 

  1. Distinct Classification
  2. Source of Funds (SoF) Concerns
  3. Anonymity and Anti-Money Laundering Concerns
  4. Licensing Process Difficulties
  5. Risk Management

Distinct Classification

The Gambling Commission prefers to classify cryptocurrencies as crypto-assets rather than currencies.

This distinction comes from the fact that cryptocurrencies do not behave like traditional fiat currencies and thus pose unique regulatory challenges.

So, what exactly are these challenges?

Source of Funds (SoF) Concerns

The Gambling Commission's main concern is verifying the legitimacy of funds used in crypto casinos.

Cryptocurrencies are harder to trace back to their origin than traditional currencies.

This opacity raises concerns about potential money laundering and other illicit financial activities.

Anonymity and Anti-Money Laundering Concerns

Cryptocurrencies offer better anonymity compared to conventional payment methods.

This may appeal to players. However, it presents a challenge for the Gambling Commission that needs stringent identity verification and anti-money laundering measures.

Crypto-assets are known to present higher risks of money laundering and terrorist financing due to their pseudonymous nature and lack of centralized control.

Current AML regulations in the UK do not sufficiently cover crypto-assets, which complicates efforts to ensure compliance within the gambling sector.

Licensing Process Difficulties

As discussed, crypto casino operators must demonstrate a clear and verifiable SoF for their operations.

The fluctuating value of cryptocurrencies adds complexity to this requirement, making it challenging to establish a stable financial base amid market volatility.

Unlike traditional fiat currencies, cryptocurrency values can dramatically fluctuate over short periods driven largely by market sentiment (news, regulatory developments, and investor speculation) rather than fundamental economic factors.

This complicates accounting and financial planning for gambling operators.

Furthermore, the volatility of cryptocurrencies introduces risks for both operators and consumers.

Holding crypto-assets as payments can expose casinos to sudden financial losses if the value drops before conversion into fiat currency.

This financial uncertainty contrasts sharply with the stability of traditional banking methods, where transactions occur in a predictable monetary environment.

Risk Management

The UKGC emphasizes the importance of risk management in gambling operations.

Crypto casinos must implement robust measures to mitigate risks associated with cryptocurrency volatility, such as adjusting deposit limits in real time to reflect changing asset values.

This is a challenge on another level.

Arguments for Lifting the Ban

Supporters of legalizing crypto casinos in the UK highlight several compelling points.

Firstly, UK punters already have access to non UK regulated offshore gambling sites that accept cryptocurrencies.

For instance, check out https://bitedge.com/crypto-casinos/ written by Will Wood who lists and reviews the top crypto casinos.

All the options on the page are open to UK players to explore.

This loophole allows them to engage in crypto gambling, albeit without the protections afforded by UKGC oversight.

Proponents suggest that legalizing and regulating crypto casinos domestically would improve player protection, ensuring fair play and responsible gambling practices under UK law.

Additionally, the widespread acceptance of cryptocurrencies in other sectors raises questions about the consistency of current regulations.

UK residents can legally use cryptocurrencies to purchase goods and services from numerous retailers and online vendors.

The exclusion of gambling transactions stands in contrast to this broader acceptance, prompting queries about the rationale behind treating gambling differently from other commercial activities.

Future Outlook and International Comparisons

The Gambling Commission continues to monitor developments in the crypto casino sector closely.

Looking ahead, the regulator stands to gain valuable insights from jurisdictions where crypto casinos operate legally and are subject to regulatory oversight.

Countries across Europe and parts of the United States have begun embracing cryptocurrencies as viable forms of payment within their gambling industries.

By observing these international examples, the United Kingdom could assess the feasibility of introducing similar regulatory frameworks that balance innovation with regulatory rigour.

As cryptocurrencies become more integrated into mainstream finance, the regulatory framework governing their use in gambling is likely to evolve.

Future adjustments may include clearer guidelines on crypto-assets, enhanced risk management protocols, and improved mechanisms for verifying the SoF.

The debate over whether the UK should lift its ban on crypto casinos hinges on considerations of consumer safety, economic opportunity, and regulatory consistency.

Overcoming these challenges will require collaborative efforts between regulators, industry stakeholders, and technological innovators to strike a balance that safeguards all participants in the country's gambling sector.

With extensive experience in the professional iGaming industry since 2015 and thousands of casino articles and reviews under his belt, Mattias is a seasoned expert well-versed in the world of online casino gambling.
 
Having worked with industry giants such as Betsson Group and earning recognition as an expert in the UK online casino industry, Mattias brings a wealth of knowledge and credibility to his role as a dedicated iGaming journalist.
 
At fastestwithdrawalcasino, Mattias’s content creation process is built upon the pillars of transparency, honesty, and unwavering commitment to quality. His meticulous research and rigorous fact-checking ensure that each review, guide, and news article is accurate and reliable.
 
Providing information in an easily digestible manner, Mattias is goal is to shed light over the UK gambling landscape and guide players to the fastest payout casinos in Britain.
 
Connect with Mattias on Linkedin.