The Malta Gaming Authority (MGA) has announced it is set to launch the second phase of its sandbox regulatory framework that looked into the acceptance of virtual financial assets as a payment method.
If the initiative adopted into its regulations, it would make Malta one of the first to grant licensed online casinos the ability to utilise crypto assets and other innovative technologies within their games and platforms.
An MGA spokesperson told Payment Expert: “The MGA embraces the ethos that in most cases regulation is more effective than prohibition in achieving the regulatory objectives which the law tasks the regulator with in relation to the gambling sector.
“In this light, we endeavour to meet advancements in technology with appropriate responses in terms of the regulatory framework, in an effort to ensure that we do not stifle innovation in such a dynamic industry whilst at the same time taking due care to ensure that our aims as a regulator are still achieved.”
In January the control board launched the first phase which accepted “applications for the use of DLT [distributed ledger technology] assets, directly or through third party service providers, by its respective licensees.”
MGA’s report, The Guidance on the use of Innovative Technology Arrangements and the acceptance of Virtual Financial Assets and Virtual Tokens through the implementation of a Sandbox Environment, has been updated to reflect its findings in the first phase.
The latest phase will last until 31 December 2021 and the board said it will focus on working with those who seek “innovative technology arrangements” (ITAs) which includes distributed ledger technology (DLT) platforms and smart contracts.
When asked about the possible risk of ‘dirty money‘ being transacted due to the animosity of digital assets, the MGA spokesperson explained: “The Authority carried out a number of studies and consulted heavily with the industry, as well as with other key national stakeholders, before publishing the Guidelines, in order to determine the real and perceived risks surrounding virtual financial assets.
“As a result the Guidelines are also designed to address such risks, including the potentially increased risk of money laundering, by requiring appropriate mitigating measures.
“With regards to the added risks of anonymity, or rather pseudonymity, these are mitigated through the imposition of standard registration requirements and wallet verification in all cases, and CDD requirements at an ever lower threshold than for fiat currency transactions.”
To acquire approval for an ITA, operators will be “required” to be audited by auditors registered with the Malta Digital Innovation Authority (MDIA).
The application will then be accepted so long as the MGA “is satisfied that the regulatory requirements shall be adhered to by the authorised person.”