Digital Currency Online Casino Regulations coming to Malta

Malta developing framework for cryptocurrency online casinos.

Malta is one of the premier regulatory bodies for the online gambling industry, second only to the UK in terms of strictness. However, they’re jumping out ahead of their jurisdictional neighbors this month with the launch of a Sandbox Framework aimed at setting up regulatory guidelines for digital currency online casino licenses.

The Malta Gaming Authority (MGA) published details for the Sandbox Framework in early October. The goal is to create regulations “for the acceptance of Virtual Financial Assets and Virtual Tokens and the use of Innovative Technology Arrangements (ITAs) within the gaming industry.”

Maltese Framework for Cryptocurrency Online Casinos

According to the press release, Malta’s new framework will be delivered in two phases. The first will begin in January 2019, when the MGA will begin accepting applications for the use of Distributed Ledger Technology (DLT) for remote gambling payments. DLTs include Virtual Financial Assets (VFAs) and Virtual Tokens (VTs); all of which fall under the broader category of cryptocurrencies like Bitcoin, Ethereum and Litecoin.

The second phase will see the MGA accepting applications for the use of ITAs as technical equipment for remote gaming licensees. A time frame for phase two has not yet been decided, but will coincide with future developments to be launched by the Malta Digital Innovation Authority (MDIA).

MGA Framework to Address Risks of Digital Currencies

In its initial report, the MGA notes various risks associated with the utilization of cryptocurrencies. The regulator is taking a “prudent approach” to the situation in hopes of addressing and eliminating those risks. Their goal is to ensure proper safeguards are in position to:

Protect players
Prevent crime, money laundering, and/or the funding of terrorist activities
Protect Malta’s reputation as a premier and upright regulator of online gambling

Heathcliff Farrugia, CEO of the Malta Gaming Authority, comments:

“By consolidating perspectives of fellow stakeholders, the gaming industry, financial services operators and key experts in these type of technologies, the MGA is issuing this sandbox regulatory framework for VFA adoption and the leveraging of innovative technology arrangements, such as DLT, within the gaming sector.

“I would like to take the opportunity to thank all stakeholders who helped us reach this important juncture. Innovation is at the forefront of our strategy, coupled with a regulatory ethos which is designed to ensure a gaming ecosystem that enables economic development and innovation but most importantly building the necessary safeguards to prevent societal and criminal risks.”

Preparing for the Future of Malta iGaming

Farrugia told attendees of the Delta Summit that his vision for MGA is to “be at the forefront of gaming regulation while embracing innovation”. The use of digital currencies at online casinos is an area of rapid growth, prompting the jurisdiction to initiate a Sandbox Framework that will allow such technology to exist in a “controlled regulatory environment”.

He notes that the framework is a “live document”, thus open to feedback and potential updating as technology and corresponding regulations develop. The MGA is predicting the framework to run for 12 full months, ending October 2019. However, an extension may be granted as the situation revolving around DLTs, VFAs, ITAs and cryptocurrency online casino payments continuously evolves.