Protecting Cryptocurrency Player Funds in the IoM

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Gambling licensees on the Isle of Man have to adhere to a requirement to protect deposited player’s funds. This is satisfied, as described in the official Guidance Notes for Gaming Designated Business, through the establishment of a designated client account with a bank, working with a fiduciary or obtaining a ‘bank guarantee’.

However, this begs the question of how to achieve this requirement when cryptocurrency is the deposit and staking asset.

It appears that the GSC’s current policy is that “an operator be allowed to accept convertible virtual currencies (CVCs), subject to regulatory safeguards on the protection of value and the security of the way value is stored”.

The IoM is seeking to future proof its Regulations to make its progressive stance unequivocal. The Registration and Accounts Regulations 2008 (SD283/08) is to be amended from stating that “An account may not be opened except by means of a deposit of money” to “An account […] deposit of money or the deposit of something which has a value in money or money’s worth”.

The format of “money’s worth” will “require the Commission’s specific approval”; thus giving the GSC discretion over which forms of cryptocurrencies will be accepted on a case-by-case basis.

It is unclear how the imperative of player funds protection will be addressed in a pure cryptocurrency world. Most likely, a bank guarantee or specialist fiduciary holding multi-signature keys on a pooled wallet may suffice.