Bitcoin Gambling: Is it Legal?
Bitcoin gambling has become a hugely popular payment method for many people around the world in recent years. With plenty of different ways to play available now, is the newest addition to the scene legal?
It’s actually quite a complex topic. This is because there are a large number of different regulators across the world. There’s also a large selection of countries all with different gambling laws in place. It means that there isn’t really a single all encompassing law to cover Bitcoin gambling around the world.
So, depending on where you are located, the views on the legalities of Bitcoin gambling will differ. Before we start to cover the intricacies of whether it’s legal to play with Bitcoin or not, we’re going to cover the basics of the different Bitcoin casino offerings that are available.
Bitcoin Gambling: What’s on Offer?
While the vast majority of our readers will be completely aware of the different ways to play with Bitcoin, it’s still important to make sure everyone is up to speed before we get into any complexities. So, how can you play at a Bitcoin Casino?
Making a payment to an online casino is the most important aspect of playing online. Without the ability to make payments, accounts can’t be funded and no-one can play. Most online casinos accept digital payments now, which has made it much easier for Bitcoin and other crypto methods to be used.
Depending on the online casino, crypto can either be used directly through the crypto address, using an e-wallet or through an exchange service built into the online casino directly. It means that crypto players have access to lots of different ways to enjoy Bitcoin gambling.
Games that allow crypto payments don’t cover the whole industry yet. It means that players who want to enjoy Bitcoin gambling, do have a slightly smaller choice of games. However, this is something that is changing as crypto becomes a more popular method of payment.
One area where Bitcoin is really taking hold is provably fair games. This is because these titles use the Blockchain in order to prove that the game is behaving in a fair manner. These games are almost exclusively available at crypto casinos. It’s mainly because crypto makes it much easier to use this technology. While fiat-based games can use this technology, the vast majority choose not to.
Of course, Bitcoin gambling is a relatively new offering to players. This is why it’s slightly behind fiat gaming in terms of games choice, but it’s also why it’s so impressive that the game choice is increasing at such a fast rate.
Safety and Security
This is an area where Bitcoin gambling really comes into its own. The security on offer when using Bitcoin is market-leading. This might not be the perception, this is mainly due to ignorance though. The p2p nature of the Blockchain offers security above high level bank security.
The ability to use cold storage wallets also means that crypto is literally impossible for hackers to steal using digital methods. The security of crypto is undoubtedly one of the biggest benefits that it holds over more traditional gambling methods.
Bitcoin also allows players to maintain their anonymity. This means it is impossible to link it to bank accounts and other details that could lead to fraud. Of course, this relies on the players taking measures to keep their details secure.
Bitcoin Gambling: Legality
Back in 2009 Bitcoin made its debut as the first digital currency and although it is still not as widely accepted as we might have hoped for, it has seriously risen in popularity over the past 5 years.
There are however many grey areas surrounding Bitcoin and people are not always sure whether Bitcoin is accepted in their region or whether it is legal or not.
The thing is, Bitcoin is a decentralized currency and can not be regulated by a monetary authority or bank and because there is no way of controlling any cryptocurrencies, it is up to every government to decide for themselves whether to allow and regulate or ban Bitcoin completely.
So, how are cryptocurrencies regulated around the globe and is it legal in your region? We did the homework on your behalf so keep on reading, some of the regulations might actually surprise you.
Regulations in North America
The US seems to be pretty laid back when it comes to cryptocurrencies and accepts it as a form of payment. Mining is also legal and cryptocurrencies are taxed by the US Federal Government. The saying, ‘If you can’t beat them, join them’ comes to mind but to what extent is Bitcoin legal in the US?
In 2013 The Financial Crimes Enforcement Network published guidance which states that it is legal to pay for services or to purchase goods using cryptocurrencies.
The US is massive however which leaves us with the question: ‘How is Bitcoin and cryptocurrencies regulated on a state level?’ Typical to the US, the rules vary from state to state and some are more relaxed than others when it comes to trading in Bitcoin and other cryptocurrencies. So, it is highly advisable to check whether or not it is allowed in the state where you live.
Canada has more or less the same legislation as the US which means that it is legal to trade with Bitcoin and other cryptocurrencies. Although it is not an official currency in Canada, you are able to pay for services and goods and you are also allowed to buy and sell cryptocurrencies but bear in mind that it is subject to taxation.
What’s really cool is that you can find crypto ATM’s in both Canada and the US that allow you to trade cash for Bitcoins and the other way around. You simply need to feed cash in the ATM and the equivalent amount in Bitcoins will be sent straight to your crypto wallet.
Canada makes it very clear that cryptocurrencies are not a legal tender and that the official currency in Canada is the Canadian dollar. This means that no bank or any financial institution manages or oversees Bitcoins or any other cryptocurrencies. But, to be fair, they seem to be really mellow and accepting when it comes to digital currencies.
Regulations in South America
In 2019 Chile declared that they would tax crypto assets and this was seen as a massive step towards making cryptocurrencies legal. Before this, the legal status of Bitcoin was a matter of guesswork. The South America country never banned cryptos completely but neither did they recognize it as a legal tender.
In the past years crypto exchanges in Chile had to face many legal battles after commercial banks closed their accounts without any legal explanation. The court battle between Bancoestado (state owned) and Orionx (a crypto exchange) resulted in the Supreme Court ruling in favour of the state owned bank, stating that it was completely legal for this bank to shut the exchange’s bank account.
Things might have changed in the meantime but I wouldn’t risk it. The area is just too grey in my opinion.
Bolivia is clearly not a fan of Bitcoin and other cryptocurrencies and have gone as far as banning it completely. The head of the ASFI (Financial System Supervision Authority) even compared it to a pyramid scheme in a statement after a fraudulent crypto arrest was made back in 2017.
But even long before this peculiar statement was issued, the Central Bank of Bolivia announced the following in:
“It is illegal to use any kind of currency that is not issued and controlled by a government or an authorized entity.”
The reason behind this ban is to protect the national currency as well as the country’s citizens from the risks of unregulated currencies. So, is Bitcoin legal in Bolivia? The answer is a very definite NO!
I quite like Argentina’s approach to the adoption of cryptocurrencies. In order to protect its savings against inflation and also to prohibit purchases and transfers of foreign currencies abroad, they were one of the earliest adopters of cryptocurrencies in the world.
In Argentina cryptocurrencies are 100% legal and although this Latin American country has issued regulations regarding the financing of terrorism, the prevention of money laundering and taxation, it has not passed a specific law in regards to the use of any cryptocurrency. Instead, Argentia chose to observe the development of digital currencies and the impact thereof on the Argentine market. I find this very forward thinking!
- Regulations in Europe
The EU is quite the opposite of South America in the sense that they have developed something called MiCA (Markets in Crypto-assets). And, once this is adopted, the MiCA will be a directly applicable law in all EU member states that will regulate all service providers dealing with crypto assets.
The main aim of this law is to implement clear-cut rules as well as long-term legal certainty. The EU believes by implementing the MiCA, it will attract crypto talent and investments globally but on the flip of the coin many fear that these stringent rules will impose restrictions on businesses and put an end to many innovative Bitcoin use cases within the EU.
It is understandable that the EU had to act and I kind of understand where they are going with this but it is also a highly debatable topic because it can put an end to innovation in the crypto space.
So, Bitcoin is legal in the EU, soon it will just be seriously regulated.
- North Macedonia
There is always one fish swimming against the stream and in the EU’s case, it is North Macedonia. This European country prohibits the use of any cryptocurrency such as Bitcoin, Ethereum, Litecoin and others. The National Banks of North Macedonia claims that crypto is linked to illegal activity and that there are huge risks involved becaused the decentralized currency is not regulated by any governed law.
Regulations in Asia
True to Japan’s innovative nature, cryptocurrencies are considered legal properties and are regulated by the FSA, Japan’s Financial Services Agency. This means users are able to buy, sell and own any digital currency freely.
Japan also offers Bitcoin ATM’s and because it has a reputation for being a financial hub, it is understandable that Japan is highly in favour of blockchain technology. In fact Japan has one of the highest adoption rates of blockchain technology per capita basis with many distributed ledger technology (DLT) businesses (such as Coinfirm) operating in this Asian country.
Cryptocurrencies are regulated by the Japanese Virtual Currency Exchange Association, the Payment Services Act and Japan’s Financial Services Agency (FSA) but if there is one country that embraces crypto, it surely is Japan.
The biggest hurdle when it comes to cryptocurrencies from a government’s perspective is tax evasion, money laundering and financing terrorism. While both South Korea and Pakistan have started to regulate Bitcoin and other cryptocurrencies, China has completely declared it illegal.
What I find really interesting is that over 65% of crypto miners are located in China. Why? Because electricity is dirt cheap in comparison to other countries. But, interestingly most miners are based in areas such as Sichuan and Xinjiang where renewable energy such as hydroelectric, solar and geothermal is quite common. This gives Chinese Bitcoin miners the opportunity to operate at peak efficiency, outlasting their foreign competitors.
I am getting side tracked here. Is Bitcoin legal in China?
The answer is No. It has been illegal since 2019 in order to curb money-laundering and has recently issued a warning on social media stating that consumers would have no protection if they were to incur any losses from crypto investments.
But, there is hope. It seems that China wants to launch their very own national cryptocurrency that will see a big change in the crypto laws in this country.
Regulations in Australia, New Zealand and Samoa
Australia has a clear cut approach to cryptocurrencies. It is 100% legal but you need to be registered with the Australian Transaction Reports and Analysis Centre (AUSTRAC). All transactions needs to be complainant with regulations to prevent money laundering, financing terrorism and other financial crimes and it is subject to taxation.
- New Zealand
In many aspects New Zealand always seems to be one step ahead and the same counts for their approach to cryptocurrencies. Not only is it legal to buy, sell or own Bitcoins, cryptocurrencies can also be used to pay your salary.
Obviously it is taxable and it needs to be pegged to a FIAT currency but this is quite a significant milestone.
- Samoa and Vanuatu
Other than Australia and New Zealand, Samoa and Vanuatu seem to be more sceptical about the use of cryptocurrencies. The Central Bank of Vanuatu does not encourage investing in Bitcoin and it is not seen as a legal tender.
It is however not illegal but if a business owner wants to promote cryptocurrencies, they will need to apply for a license to do so. If such a business does not comply with the Money Laundering Prevention Act, imprisonment or hefty fines are issued.
Regulations in Africa
- South Africa, Namibia, Zimbabwe and Nigeria
It is not that Bitcoin or cryptocurrencies are outright legal in South Africa, Zimbabwe, Namibia and Nigeria but it is also not outright illegal because these countries have not banned or regulated cryptocurrencies entirely.
In 2014 the South African Reserve Bank stated that virtual currencies are not overseen, supervised or regulated and this has not changed since. There is no law regarding the exchange or ownership of Bitcoins and because Bitcoin is not seen as a legal tender, it is not accepted as a form of payment.
Surprisingly, this doesn’t stop South Africans from owning Bitcoins and other cryptocurrencies. In fact, 10.7 % of internet users in South Africa own cryptocurrency, according to a study.
- Algeria, Egypt and Morocco
In Egypt, crypto trading is strictly prohibited under the islamic law. Although a religious decree is not legally binding, Egypt’s banking laws made new amendments in 2020 prohibiting issuing, promoting or dealing in cryptocurrencies without a license from the Central Bank of Egypt.
In Algeria crypto has also been banned since 2018 and the same counts for Morocco although Bitcoin purchases are soaring in this African country.
Bitcoin and cryptocurrencies have opened up many doors across the globe. I do understand that governments and central banks need to get a grip on this new way of trading and that money laundering and funding terrorism should be closely monitored but I do find this new revolution incredibly exciting.
Some countries embrace it while others ban it completely but one thing is sure, crypto is not going anywhere, whether they like it or not.