Malta's sandbox environment for virtual financial assets, along with three crypto laws, made it easier for iGaming companies to embrace the new technology.
Always ahead of other countries, Malta is once again the leader of innovation across the world.
More than a decade ago, the country was the first to provide a legal framework for iGaming firms. Now, with the enforcement of three pioneering laws on cryptocurrencies and distributed ledger technology (DLT) in late 2018—the Malta Digital innovation Authority Act, the Innovative Technology Arrangement and Services Act, and the Virtual Financial Assets Act—the Mediterranean archipelago is now regarded as the “Blockchain Island.”
With the growing influence of blockchain in the country, many operators have recognized the technology’s benefits and have begun integrating DLT-related features into their services.
And in line with this development, the Malta Gaming Authority (MGA) has moved to help iGaming companies embrace blockchain and crypto in a regulated scene through a testing environment.
MGA’s Trial-and-Error Approach
Last January 1, the regulatory body started accepting applications from gaming operators who wish to have Virtual Financial Assets (VFA) and utility Virtual Tokens as modes of payment and other uses.
For a preliminary duration of 10 months, the Authority will hold a regulatory sandbox environment where accepted operators must follow the rules imposed by the “Guidance on the use of Innovative Technology Arrangements and the acceptance of Virtual Financial Assets and Virtual Tokens through the implementation of a Sandbox Environment.”
Released in October 2018, said document also stated that the regulations present could change “as may be rendered necessary by technological and regulatory developments,” as is the custom in a trial-and-error environment.
Heathcliff Farrugia, MGA CEO, said last October:
“The MGA’s strategic mission is to be at the forefront of gaming regulation whilst embracing innovation. This, coupled with the rapid rise in interest from gaming operators to incorporate VFAs and DLT into their operations, were the main drivers behind the proactive approach taken by the Authority.”
Interested iGaming operators must fall under the requirements specified by the Authority in the Guidance document in order to qualify for the sandbox. In addition, new gaming operators can apply for the use of VFAs as a payment method at the same time as their license applications.
Rules on Crypto Funds
Once they become a member of the Authority’s regulatory sandbox, gaming companies have to comply with a number of regulations dictated by the document. One of the important rules operators have to study closely revolves around crypto-related deposits and withdrawals.
The Authority stressed that players could move their crypto funds using only their own wallets. During registration, bettors should also indicate a wallet address, which will then be associated with their own accounts. Before every deposit or withdrawal, operators should first verify the address given by their clients.
In addition, bettors could receive their crypto winnings only in the form of digital tokens that they deposited before. Withdrawals should also be directed to the same wallet used for deposits, with few exceptions. These rules prevent players from using online casinos as an indirect crypto exchange—the services of which require licensing as mandated by the VFA act.
The gaming document also requires member operators to keep a record of both successful and failed player deposits and withdrawals. These logs would help gaming companies to verify clients’ complaints.
Helping Hand in Licensing
Complying with different requirements for a gaming license in Malta could prove difficult for up-and-coming iGaming companies. Aside from submitting tons of documents needed for the application, operators must keep constant communication with the Authority throughout the process.
The arduous but necessary process could be made lighter for aspiring operators through the helping hand of law firms like Malta’s own WH Partners. The services of these legal offices include not just assistance during the entire licensing process, but also after it.
Law firms can be tapped to help with the operators’ tax compliance, financial and investment services licensing, employment contracts, anti-money laundering compliance, reports to the Authority, and more.
Malta has now made it possible for iGaming companies to embrace crypto without fear of falling into regulatory limbo. The onus now falls on these operators to join the ongoing blockchain revolution in the country.