The gambling industry has seen a dramatic shift ever since cryptocurrencies were invented. As cryptocurrency becomes more mainstream, interest in crypto gambling platforms has increased. However, for players to navigate this new gambling ecosystem, understanding relevant legal and regulatory requirements has become important.
Not only do crypto casinos give players more options, but, according to 99Bitcoin’s Alexender Reed, they also allow cryptocurrency casino online betting sites and operators to avoid strict restrictions, making them a popular option for online wagering in the UK. In this article, we’ll take a look at important crypto regulations in the UK that promote safe gambling practices that players need to know about.
Licensing Requirements for Crypto Casinos in the UK
Gambling sites like Bitcoin casinos have become popular due to their quick payouts. However, if these platforms want to operate in the UK they need to meet the strict criteria set by the UK Gambling Commission (UKGC). Let’s see what requirements crypto casinos have to meet so they can get a license:
UKGC Licensing Requirements: The licensing requirements set by the UKGC need crypto casinos to ensure that their platforms are fair and safe for all consumers. To meet these requirements the UKGC has enacted rules covering various aspects of their business
practices. These rules include the need for crypto casinos to have extensive anti-money laundering compliance programs to ensure that all payments are processed transparently and securely. Crypto gambling sites are also required to prove the trustworthiness and legitimacy of their payment mechanisms to this regulating body. When accepting crypto assets these gambling sites need to know where they originate from.
Legal Status in the UK: There aren’t any laws that directly address crypto gambling legality in the UK at the moment. However, this still shouldn’t prevent crypto casinos from seeking gambling licenses in the UK.
Crypto Assets and Funding
The Treasury has declared that they plan to robustly regulate crypto asset activities in their entirety to provide more clarity and confidence to all businesses and consumers who are involved or who plan to transact in crypto. This is great news as crypto assets are starting to be a popular payment method that consumers want to use to fund their gambling accounts. Currently, consumers are facing challenges when it comes to evidencing their source of funds thus making their use a gray area. Here are some important points you’ll need to consider before betting with crypto:
Crypto Asset Usage in Funding: Bitcoin, Ether, and other crypto assets are being used more frequently to fund gambling accounts because of their global accessibility, security, and speed. However, regulators are worried about issues concerning regulatory compliance which is why they only recommend using licensed services.
Evidencing Source of Funds: Players usually find it hard to prove the legitimacy of their crypto-asset-derived funds. That’s because crypto assets don’t have a centralized record, unlike fiat currency which makes tracing their origins harder but not impossible.
Tax Implications
There aren’t any levies associated directly with both gambling and crypto assets in the United Kingdom but those who gamble with crypto may still be liable to pay Capital Gains Tax (CGT) and Income Tax. Let’s see how below:
CGT: All profits that exceed the £6,000 tax-free allowance will get taxed when cashing out your crypto. Should your gains exceed this threshold you’ll have to pay a 10% or 20% tax on your winnings. However, how much money you win plays a role as people who earn less than £50,270 pay 10%, while those who win a higher amount or who pay additional or higher tax rates will pay 20%.
Income Tax: Crypto winnings over the £12,570 personal allowance tax rate band are subject to income tax. Should your winnings go over this amount expect to pay between 20% and 45%, depending on how large the winnings are and the levies associated with the income band you fall under.
Responsibility for Third Parties
UKGC regulations largely hold their licensees accountable for the actions of the third-party services they may use to market, manage, or handle their crypto casino finances. Let’s see how this protects players:
Social Responsibility Code 1.1.2: Licensed crypto gambling sites are required to stick to this code which names their duties towards all third-party service providers they may use to manage their platforms to ensure ethical conduct, transparency, and fairness.
Due Diligence for White Label Arrangements and Marketing Partners: Once crypto casinos get licensed in the UK they are expected to have thorough due diligence procedures for third parties they plan on entering white label agreements with. This helps with ensuring that these providers align with responsible gambling principles.
Responsible Financing Practices: Licensed crypto casino owners must also ensure that the third-party service providers they use to handle their finances stick to the necessary ethical standards and financial regulations such as the Financial Services and Markets Act of 2023 which has new provisions regulating crypto assets.
For Expert Reviews of Gambling Sites that accept cryptocurrency, check out this resource, with the right information, you can make informed choices and enjoy a seamless crypto gambling experience.
