Australia’s primary regulator of online sports betting is asking local operators to help craft rules for wagering with blockchain-based digital assets.
The Northern Territory Racing Commission (NTRC), which counts among its licensees all of Australia’s major online sportsbooks, has issued a draft regulatory framework that would permit its licensees to both accept wagers made with ‘cryptocurrencies’ and pay out ‘crypto’ winnings to lucky punters.
The NTRC has given its licensees until September 29 to submit their feedback on the framework, including whether or not they’re actually interested in offering non-fiat options to their customers. For those that are interested, the NTRC wants specifics on which digital assets they would prefer to utilize.
This step has reportedly been on the radar for months now but nonetheless marks a 180-degree shift from an advisory the NTRC issued in 2018. Back then, the NTRC said it hadn’t authorized any crypto-based wagering and ordered those who were offering such options to “immediately cease and desist.” The order was aimed squarely at bookmaker Neds (part of the Entain Group), which was promoting itself as Australia’s first BTC-based betting platform. (A search for ‘bitcoin’ on Neds’ site currently turns up a ‘no results’ message.)
An Aussie lawyer who’s read the framework stated that the NTRC is proposing monthly caps on both deposits and wagers for the first year of an approved blockchain-based regime. The caps appear fairly generous—AU$2,000 (US$1,380) for deposits and AU$5,000 for wagers—meaning only whales and/or degenerates would likely find them too restrictive.
There would also be restrictions on the flow of digital assets on and off betting sites, including requirements to verify wallet addresses and to ensure that any withdrawn ‘crypto’ is traveling back to the wallet from which it was deposited.
Crucially, the framework would reportedly allow for ‘crypto’ wagers without first converting to fiat. This would require operators to hold sufficient volumes of certain tokens to pay off all pending wagers, even the longshots. Serious ramifications could result if the sports gods orchestrated too many punter-friendly ‘Black Sunday’ events that forced the books to rapidly acquire tokens that might have dramatically appreciated in fiat value since the wagers were placed.
This same dynamic might also limit digital currency wagers to short time windows between the placing of the bet and the resolution of the event on which the bet was placed. Particularly in the case of futures bets, such as pre-season wagers on which team will emerge triumphant when the season concludes in six months’ time (these wagers generally offer very high returns for the handful of individuals who bet correctly on long-shots).
There’s also the potential problem of whether a sudden surge in the fiat value of a ‘crypto’ asset would push an individual customer’s monthly deposit/betting limits over the stated maximums after the fact. Not to mention the added cost of deposits/withdrawals should a particular blockchain’s transaction fees suddenly spike due to network congestion or other factors.
Given some of these known unknowns, some operators may think twice about adding a ‘crypto’ betting option out of the gate, adopting a wait-and-see attitude by letting bolder books test these waters first. In the meantime, there are already internationally licensed bookmakers that take ‘crypto’ wagers from Aussies without the permission of bodies such as the NTRC (mainly because these operators lack access to Aussie banks).
The U.K. Gambling Commission (UKGC) is considered the world’s foremost regulatory body but it has struggled with precisely how to regulate its licensees’ use of digital assets. Highlighting some of the problems it faces on this front, the UKGC notes that “cryptocurrencies are more accurately referred to as crypto-assets as they are not performing the functions generally associated with a currency,” in part due to cost-prohibitive transaction fees.
One digital asset that does perform like a currency is Bitcoin SV (BSV), thanks to its unbounded scaling capacity and ultra-low transaction fees. Small wonder then that BSV has attracted a growing number of gaming-based companies looking to take advantage of the developmental benefits they can’t find on any other blockchain.
Highly volatile, inherently risky and complex
Meanwhile, Joseph Longo, chair of the Australian Securities & Investments Commission (ASIC) gave a speech this week to the Committee for Economic Development of Australia (CEDA) to lay out the key trends that will help shape ASIC’s priorities in the year to come. The speech builds on the investor research report that ASIC released earlier this month that found 80% of investors didn’t view digital currency investments as carrying significant risk.
On August 23, Longo said ‘crypto’ assets were “highly volatile, inherently risky and complex” investments, particularly given the rise of scammers taking advantage of consumers who don’t acknowledge the risks. Longo said ASIC’s strategy to target scammers would be to “disrupt their operation, using innovative, data-driven approaches to drive early intervention and, where possible, prevent loss to consumers in the first place.”
ASIC supports developing “an effective regulatory framework and greater regulatory clarity” for crypto-assets, including working with “domestic and international peers” to ensure “coordinated action and standard-setting.” This will be accompanied by enforcement action to “disrupt and deter harmful products already within ASIC’s jurisdiction,” including those “that mimic traditional products or seek to circumvent regulation.”
Australia’s Treasury Department recently announced a ‘token mapping’ project to ascertain which digital assets can be regulated under existing regulations and which might require bespoke rules to ensure adequate consumer protection and anti-money laundering efforts.
Watch: Crucial Compliance CEO Paul Foster talks utilizing blockchain for gambling compliance on Hashing It Out
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