Cryptocurrencies in the gambling business: who benefits from the lack of a legal framework

The prospects of crypto gambling, the risks of the “gray” market, and future regulation – in a conversation with Cosmobet beneficiary Mikhail Zborovsky.

Cryptocurrencies have become an integral part of the modern economy. They are used for investment, payment for services, and even in traditional sectors. The gambling industry is no exception: blockchain technologies have opened up new opportunities for process automation, increased transparency, and expanded access to the global market.

However, unlike classical payment systems, cryptocurrencies still remain in the “gray zone” of legislation in many countries, including Ukraine. This uncertainty provides both new opportunities for business development and increased risks for participants.

Why are gambling and cryptocurrencies distrusted?

-Mikhail, why is the attitude towards gambling and cryptocurrencies in Ukrainian society mostly negative?

– This is due to several factors. Cryptocurrencies are often perceived as unstable financial instruments, and the lack of clear legislation only reinforces this sentiment. As for gambling, until 2020, it functioned mostly in the shadows, which created distrust.

However, the situation is changing. Over the past four years, legal gambling companies have proven that they can be responsible economic participants, pay taxes, invest in social projects, and develop transparent operational processes.

Blockchain in the gambling business: benefits for operators and players

Blockchain technologies are increasingly being integrated into the gambling industry. According to Mikhail Zborovsky, their key advantages include:

1. Speed and cheapness. Crypto payments are processed instantly, and fees are much lower than in traditional payment systems.
   
2. Global access. Cryptocurrencies have no geographical restrictions, which opens up gambling platforms to an international audience.
   
3. Innovation and security. Smart contracts automate payment processes and ensure transparency of game results, minimizing the risk of fraud.

Example of use

An operator that has implemented cryptocurrency payments can offer better conditions for players:

• No restrictions on the minimum deposit.
• Additional bonuses for using crypto.
• The ability to play anonymously.

Using stablecoins

Stablecoins, such as USDT, are ideal for gambling because of the stability of the exchange rate. This reduces the risk of financial losses due to market volatility.

Cryptocurrency and the “gray” market: why do illegal operators choose it?

Why is crypto attractive for the shadow market?

Illegal gambling platforms choose cryptocurrencies as the main payment instrument for a number of reasons:

1. Anonymity. Transactions in the blockchain can be traced, but wallet owners remain unknown, which allows avoiding the attention of regulators.
   
2. Lack of geographical restrictions. The use of crypto allows operators to work in markets with strict anti-gambling laws.
   
3. Low fees. Bank transfers often involve high fees, while cryptocurrency transactions are much cheaper.
   
4. Speed of payments. Cryptocurrencies provide instant payments, which is important for players who want to receive winnings quickly.

Risks for players

Despite the allure, players who choose cryptocurrencies on illegal platforms face many dangers:

• Lack of payout guarantees. Shadow operators can simply disappear with customers’ money.
  
• Fraudulent platforms. Without a license or regulator, there is no mechanism for refunds in case of fraud.
  
• Legal liability. In some countries, participation in illegal gambling via crypto may have legal consequences.

Mikhail also provides an example of an illegal scheme. Imagine a platform that promises a 200% bonus for the first deposit in Bitcoin. Players deposit money, but then face the requirements of additional deposits to “activate the winnings”. As a result, customers are left without money, and the platform disappears.

Cryptocurrency regulation: what will change?

Ukraine is on the verge of significant changes in the field of cryptocurrency regulation. The country is expected to take an important step towards the legalization of digital assets in the near future. This will open up new business opportunities, particularly for the gambling industry. One of the promising approaches that could be applied is the creation of a so-called “ sandbox”. This is a space where companies can test new technologies under the supervision of the state, gradually adapting their products to the requirements of the legislation.

– A great example is the UK, where operators test innovative solutions under state supervision. Ukraine could apply a similar approach, gradually integrating crypto technologies,” Zborovsky comments.

For legal operators, this will mean the opportunity to work openly, expand their customer base, and increase trust from players. At the same time, the state will receive additional tax revenues, and players will be confident that their money and data are protected.

The future of crypto gambling

The popularity of cryptocurrencies in gambling continues to grow, and this trend is only gaining momentum. Bitcoin, Ethereum, and stablecoins such as USDT are the most commonly used in the industry. The latter are especially attractive due to the stability of the exchange rate, which allows avoiding the risks associated with volatility.

Ukraine already demonstrates high rates of crypto adaptation. According to research, about 12% of Ukrainians have experience with cryptocurrencies, which puts the country in the top in terms of the use of digital assets. This creates a favorable environment for the development of both the cryptocurrency sector and related industries, including gambling.

Cryptocurrency legalization will attract international companies and investors, creating new jobs and ensuring economic growth. At the same time, it will increase the level of security for users who will be able to use licensed platforms. The future of cryptocurrency gambling looks promising, but it depends on the ability of regulators to strike a balance between freedom of innovation and protection of users’ interests.

Conclusions

Cryptocurrency is not only a financial instrument of the future but also a way to make the gambling business more transparent and technologically advanced. Ukraine is on the verge of major changes, and it is important to create conditions for the integration of blockchain into the economy without losing control.