Crypto gambling is facing an inflection point, as longtime haven for the industry Curaçao finally steps up compliance requirements for the sector.
This week saw the Curaçao Gaming Authority (CGA) unveiled a raft of requirements for crypto gambling operators regulated on the Caribbean island.
The new rules require gambling companies to be significantly more aware of the crypto transactions flowing into their business.
“Licensees do not need to be blockchain analysts, but cannot operate blindly with regard to crypto transactions,” the guidelines read.
Operators will need to have policies in place to return funds when prohibited activity is detected and to report suspicious incidents.
Curaçao licensees will also be prohibited from converting coins between crypto currencies or into fiat for its customers, or in any way acting like an exchange.
In line with expectations recently laid out by the Financial Action Task Force (FATF), operators need to take steps to establish and record the origin of the transactions coming into their platform.
In short, operators will be required to comply with the FATF’s so-called Travel Rule, which establishes a package of information that should accompany every transaction.
The new policy indicates that the CGA considers any kind of crypto transaction to be high risk, from a money laundering perspective, and the regulator says that it “prefers” that licensees transact only in fiat-backed stablecoins.
Although the regulations impose no specific requirements on payment processors, any failings discovered by the CGA that relate to a PSP partner will result in enforcement for the licence-holding operator.
This, in effect, also raises the stakes for payment firms which want to ensure they don’t lose Curaçao clients over sloppy treatment of crypto transactions.
A ban on the use of wallets suspected of involvement in crime and operators acting as exchanges has come into effect immediately.
Operators have been given until September to submit a new crypto policy to the CGA, which lays out a timeline to reach full compliance.
Full integration with the new rules is expected by June 2027.
New era
The new crypto regulations are far removed from Curaçao’s controversial past as an offshore hub for the online sector.
Under the previous regime of sub-licensing from a group of shadowy master licence holders, even the Curaçao government admitted it wasn’t sure how many companies were operating with its regulatory approval, let alone if they were handling crypto gambling in a responsible manner.
“The regulatory wild-west of offshore crypto-gambling is officially closed,” said compliance expert, Daria Belova.
However there will continue to be those who question the CGA’s commitment to holding its licensees to account.
There will be a particular focus on clear industry leader, Stake.com. Although firm data is hard to come by, the crypto-forward operator is believed to account for a significant percentage of transactions in Bitcoin and other cryptocurrencies.
Is it at least publicly known that Stake’s $4.7bn in revenue for 2024 puts it in the same class as industry stalwart Entain.
Stake’s dotcom operation indicates that it is regulated by Curaçao through a business unit entitled Medium Rare N.V.
That will place the crypto gambling giant firmly in the crosshairs of these new regulations and any enforcement investigations which might follow the CGA’s July 2027 deadline.
There are also fears that some crypto-forward operators looking to continue doing business with lax oversight will simply leave Curaçao in search of a truly “anything goes” jurisdiction.
In the past few years, as the Caribbean island has indicated its intentions to re-regulate, regions like Anjouan have emerged as potential light-touch destinations for B2C gambling firms.
One payments industry commentator said that Curaçao operators face a real choice.
“This creates a fork in the road,” said Andrew Christodoulou, senior business development manager at PaymentIQ.
“Those who built their crypto payment infrastructure properly with segregated wallets, chain analytics and documented policies will absorb these changes without breaking a sweat.”
Others face a complex road to compliance or a decision to fully embrace the legally dubious offshore world.
One step in the road
New crypto rules are just part of the ongoing regulatory revolution in Curaçao and licence-holders have other new deadlines to grapple with.
These include a requirement that by October 8 they have updated the way they handle terms and conditions.
From this date, operators cannot treat their customers as having passively accepted T&Cs. Instead, the CGA expects licensees to show evidence that gamblers have proactively agreed to their terms.
Consumers must also be able to find a complete list of all approved deposit and withdrawal methods, as well as an estimate of normal processing times.
