UKGC approves Bitcoin, Digital Currencies for Internet Gambling

Bitcoin Digital CurrencyIt’s official – UK licensed internet gambling sites will soon present their members with a new classification of payment methods. The UK Gambling Commission has declared that digital currencies like Bitcoin will soon be eligible for use to fund iGaming accounts.

Last week, the UKGC revealed a slight alteration to its  Licence Conditions and Codes of Practice (LCCP). The digital currency amendment appears under the LCCP’s ‘Licence Condition 5.1.1, Cash and cash equivalents‘, which now reads:

Licensees, as part of their internal controls and financial accounting systems, must implement appropriate policies and procedures concerning the usage of cash and cash equivalents (eg bankers drafts, cheques and debit cards and digital currencies) by customers, designed to minimise the risk of crimes such as money laundering, to avoid the giving of illicit credit to customers and to provide assurance that gambling activities are being conducted in a manner which promotes the licensing objectives.”

Note that the newly revised LCCP will go into effect on October 31, 2016. Digital currencies will not be available for licensed internet gambling sites until then.

Surprising Turn of Events

The regulation of digital currencies like Bitcoin came as a bit of a surprise. There was only one mention of the fact that the UKGC was even contemplating eligibility for the virtual payment method.

In an annual report released in early July, the Gambling Commission skimmed over the subject ever so slightly when mentioning potential topics of increased interest.

The only line in the report that referred to the possibility read:

“A further area for continuing future focus will be on emerging products and digital currencies…”

That paragraph went on (notably lacking any further mention of digital currencies) to read:

“…The growing market in esports and computer gaming has scope to present issues for regulation and player protection – issues which are being examined by gambling regulators in other international markets. These issues range from the emergence of real money esports betting markets, to trading in-game items which blur the lines between gambling and social gaming. Our focus will be to understand developments, including engaging with key stakeholders, and we will work wherever we can to ensure the risks associated with these, particularly to children and young people, are minimised.”

What It Means for Internet Gambling Ops

The quiet introduction of Bitcoin and other virtual currencies will allow UK’s licensed internet gambling operators to implement a wide range of digital payment methods. The new regulatory guidelines do not stipulate which currencies are and are not eligible, giving operators a wide berth in terms of selection. Due to popularity and longevity of service, there’s little question that Bitcoin will get the most attention out of the gate.

However, it will be up to each operator to implement digital currencies responsibly, with the UKGC maintaining ultimate oversight via the LCCP’s extensive “best practices” documentation. The framework therein mandates that operators strictly comply with preventative measures to thwart any payment method from being used for money-laundering.

Because Bitcoin and other virtual currencies come with a heightened level of anonymity for users – that was, in fact, one of the driving goals in creating them – the UKGC will certainly take additional steps to further enforce the region’s Know Your Customer (KYC) policies for internet gambling operators.

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