SolutionsHub is the Isle of Man’s only experienced alternative payments and blockchain gambling licensing specialist and the only Isle of Man business engaged in end-to-end ICO planning and execution services. We are actively engaged in numerous ICOs and our management team recently took the first (and only) blockchain gambling operator through the licensing process, including designing world-first crypto and player protection solutions.
The recent guidance issued by the Isle of Man Gambling Supervision Commission, regarding the regulatory framework for crypto, blockchain and virtual currency businesses, has been drafted based on the experiences gained working with the Token Partners team. We have not dictated policy, but it is fair to say we have influenced the regulators approach to their supervision programme with the innovative, world-first solutions to key regulatory stumbling block, we have designed and implemented for our clients.
Our team is renowned for its knowledge and expertise in dealing with new legislation and previously unseen business models, designing complaint solutions stands us in the highest regard with the authorities.
Having been engaged to apply for a remote gambling license for a decentralised lottery using Ethereum smart contracts, we were presented with many regulatory issues including identification of token holders (source of funds), ensuring participants are of the legally age to play, sourcing a Basel 2 compliant bank of operational expenses and even (but not limited to) a stipulation that ‘The account/address used to deposit crypto should be the account/address used for withdrawal transactions’ – Lee Hills, Director of SolutionsHub
The core misunderstanding with almost all current gambling related ICOs is that in almost all major gambling markets, regulations have changed so cryptocurrencies, skins and virtual currencies are now treated as fiat money; therefore a gambling license is required. Similarly, providing smart contract technology and taking a royalty from the gambling therein, is licensable.
We recently heard the excuse; “but players can just use a VPN so what’s the point”. VPN checking is just one of the measures put in place by licensed operators and a fairly unsophisticated one at that. Most rely on data checks with third party agencies. Depending on the country they may still accept the customer on registration but take a ‘risk based approach’ and lower the gambling limit, then take a copy of a passport over email, or text on first withdrawal. That is somewhat oversimplified, but provides a flavour of the mechanisms in place to protect the licensee.
Ultimately, there is a way to launch DAO gambling legally that isn’t going to land the development team with arrest warrants, or large fines in various jurisdictions. Many of the gambling ICOs seem to believe that offering a whitebox Random Number Generator offers them credibility, however these businesses will not be able to scale and deliver real value to participants without litigate, legal gambling, which a license provides.
These will not gain mainstream credibility, or legal market access and the operation will likely form a criminal enterprise. That sounds extremely harsh, but we want to inject some reality into where national regulators are heading (and the legislation that supports their criminal prosecutions).
We believe that some of the DAO gambling propositions could be revolutionary businesses, but the general disregard for legal issues requires a complete overhaul, so all parties with a financial interest can move forward knowing the funds (regardless of nature) are clean and legal.
Contact SolutionsHub to find out how we can help your business, book a consultation now