The Malta Independent 18 June 2024, Tuesday
View E-Paper

Malta could transform the gambling industry through Blockchain regulation

Thursday, 15 March 2018, 07:30 Last update: about 7 years ago

In recent years, Malta has become one of the biggest gambling hubs on the Old Continent. This small island has been a host to numerous poker tournaments, including the prestigious 2016 European Poker Tour, but more importantly, it is home to one of the most stringent gambling regulatory bodies in the world, namely the Malta Gaming Authority, Hannah Wallace wrote on casinogamespro.com.

ADVERTISEMENT

It makes sense Malta has always been a major driving force behind the gambling industry’s growth and its plans to introduce the first blockchain regulatory legislation in the world are the most recent example for this.

It all started in the spring of 2017 when the country’s Prime Minister Joseph Muscat unveiled the first draft of Malta’s strategy to promote and regulate the blockchain technology. Muscat revealed at the time this cryptocurrency technology has multiple applications as it can also be implemented in the country’s national Health and Land Registries.

In January 2018, the Maltese Financial Services Parliamentary Secretary Silvio Schembri revealed the country’s plans to become the first jurisdiction in the world to create a regulatory framework for the blockchain technology. Three separate bills were introduced for public consultation and once this process is concluded, the Maltese government will present them to the Parliament.

The first bill is the MDIA bill which has to do with the creation of a framework for the Malta Digital Innovation Authority. The latter will be assigned the role of a central regulatory authority, whose purpose will be that of overseeing the operations of all entities that deploy the cryptocurrencies and to provide them with incentives to base their businesses in the island country.

The MDIA would also provide information on the ethical standards and the legitimate utilization of the Digital Ledger Technology or DLT. The MDIA would seek to promote and safeguard transparency and preserve Malta’s immaculate reputation of an established financial-services center in Europe.

The second bill that was proposed for public consultation is the TAS bill that aims at setting out a framework for the registration, assessment and certification of service providers of Digital Ledger Technologies on the territory of the country. This would enable individuals to request a certification for a technology arrangement from the MDIA. In order for the MDIA to even consider the request, the administrator of the requested technology arrangement needs to be registered with this authority.

And finally, the purpose of the last bill, the VC bill, is to introduce a framework applicable to the so-called Initial Coin Offerings as well as a proper regulation scheme for the provision of all services that relate to cryptocurrencies. Some of the intermediaries that would be subjected to the VC bill include cryptocurrency wallet providers, brokers, cryptocurrency exchanges, and asset managers.

When the bills are approved, they will regulate three types of platforms related to the Digital Ledger Technology – those intended for private users (for example banking institutions looking to adopt DLT platforms to pay employees’ salaries), private platforms that can be used by third parties, and fully public ones like Bitcoin, Litecoin, and Ethereum. The consultation process for the three bills lasted until March 9.

The blockchain technology also has applications to the oil and gas industry as it enables individuals to process instant and transparent transactions. What is more, the introduction of proper regulation of the blockchain technology bears the potential to transform the online gambling industry all over.

In its essence, the blockchain technology is a digital ledger which allows for the storage of online financial transactions that rely on cryptocurrencies. This allows for a direct connection between consumers and suppliers to be established and eliminates the necessity of using the services of third parties like banking institutions, for example.

In comparison, each bank would use its own electronic ledger to store and synchronize its transactions whereas the digital ledgers of the blockchain technology are decentralized. This also means that the information related to the blockchain transactions can be accessed by all parties that are part of a given blockchain. The data is not controlled by a single entity or party.

Cryptocurrencies like Bitcoin, Litecoin and Ethereum have already made their way into the cashiers of numerous iGaming operators. One of the biggest advantages of using such virtual currencies for the purposes of online gambling results from the fact that decentralized technology adds an extra layer of transparency to the transactions. This aspect of the blockchain technology can also be used as an effective tool in the battle against money laundering.

Also, blockchain casinos would enable their customers to transfer money to their gambling accounts completely anonymously. The blockchain technology eliminates the need of sending over copies of personal documents for the purposes of identity and payment-method verification.

Another aspect of cryptocurrency that renders it ideal for online gambling has to do with the smaller transaction costs. Additionally, the time required for the transactions’ completion is greatly reduced and the deposits take place almost instantaneously.

The adoption of the blockchain technology makes it possible for online gambling regulators to prove they play by the rules and are fair to customers. Best of all, everyone can become a “member” of a given online casino, so to speak. Some Bitcoin gambling operators already allow their customers to fund them and profit with a percentage of the house edge.

This above idea is now taken to a whole new level thanks to cryptocurrency platforms like Ethereum and projects such as vSlice which make it possible to create a system that enables digital-token holders to get dividends from the profits the platform generates.

Last but not least, virtual currencies and the blockchain technology they rely on increasing the accessibility of online gambling services as they allow players to bypass stricter gambling regulations, applicable to fiat money transfers only. This is so because of the decentralized nature of cryptocurrencies.

 

  • don't miss