Malta Gaming Authority on its blockchain movements

EGR Technology: The MGA is one of the first authorities to make advancements towards cryptocurrency and blockchain in the egaming space, considering it hasn’t proved popular amongst bigger operators yet, why have you decided to make this push now?

Joseph Cuschieri (JC): We feel that cryptocurrencies and blockchain are innovations which are gaining significant ground. As an innovative and forward looking regulator, we need to embrace new concepts taking into account carefully the risks and opportunities involved so that such inherent risks can be mitigated accordingly within the context of a dedicated control framework which at the outset will be a prescriptive one. We want to be prudent but at the same time we don’t want to overlook opportunities for innovation and development. We are actively pursuing the publication of a formal position on cryptocurrencies so that the industry will know exactly how the MGA intends to supervise cryptocurrency adoption.

EGR Technology: We’ve seen much movement made by the financial services and insurance sectors, but how can crypto and blockchain help advance the global online gambling industry?

JC: Cryptocurrencies offer an alternative digital payment method for players compared to the existing payment methods. This in itself is an opportunity for the gaming industry to innovate on the digital payments side of the value chain by providing an alternative (payment) mechanism for players who want to make use of virtual currencies. Having said this, it is important that such a disruptive innovation operates within a properly regulated environment.

EGR Technology: How close a link is there between egaming and blockchain/ cryptocurrencies?

JC: Blockchain technology is adaptable for remote gaming depending on how the operator decides to use it in their value chain. For example, blockchain can provide a robust platform for a transparent gaming economy. As a transaction system that doesn’t rely on a trusted third party, blockchain enables gamers to directly connect to developers and compensate them for playing their games.

EGR Technology: How much movement has been made in the technical study on regulation? What does this entail?

JC: The technical study is complete. We are currently analysing it in detail so that we can then proceed with the publication of our formal guidance document once all the consultations are concluded.

EGR Technology: Is regulation the most complex element of crypto and blockchain? Why?

JC: Yes because it involves different facets to set up a proper control environment like for example restrictions on PSPs, monitoring and supervision mechanisms, nature of transactions, game restrictions, taxation issues and reporting amongst other factors. The legal and regulatory environment landscape for cryptocurrencies has continued to evolve at a rapid pace. Clarifications have continued to properly define the status of cryptocurrencies and its acceptance if at all by governments. The 4th Anti Money Laundering Directive continues to dominate in the EU with cryptocurrencies being incorporated in the proposed amendments to this directive.

EGR Technology: In what other jurisdictions have you seen cryptocurrencies welcomed by the gambling industry? Are you working with them on this?

JC: The Isle of Man issued its first guidance on accepting convertible and non-convertible virtual currencies for gaming operators. The UK Gambling Commission issued a position paper as well.

EGR Technology: What kind of response have you received from local remote gambling operators? Are they interested in the concept? What are their concern?

JC: The response is positive so far but the industry wants to know more about the controls which will be put in place (eventually).

EGR Techology: How far are we from the concept being welcomed by the global egaming industry?

JC: This depends on the regulatory environment we shall put in place. Then it depends on the gaming industry whether to adopt it or not.

EGR Technology: It seems at this point in time most operators are still very uncertain about it, how are you going to convince them that blockchain is the way forward for remote gambling in Malta?

JC: This depends on the regulatory environment we shall put in place. Then it depends on the gaming industry whether to adopt it or not. It is not our role to convince operators to adopt a particular technology.

EGR Technology: Are local operators involved in the process?

JC: No. We will publish our position for consultation in due course.

EGR Technology: How closely are you working with the government on this, as part of their wider mission to invest in blockchain technology?

JC: The MGA is working closely with Government on this in line with the Prime Minister’s vision of making Malta a centre of excellence for blockchain technologies.

EGR Technology: What’s the timescale for introducing legislation on crypto and blockchain in Malta? What advancements are you looking to introduce first?

JC: This is premature at this stage of the process but Q1 2018 is doable.

MGA chairman, Joseph Cuschieri