Crypto Casino Solution Legal Setup for Crypto Gambling

Crypto casino software providing agreement

Not a single online casino can exist without games in it. Henceforth, the primary point in the plan should be making an agreement with the software providers whose games you intend to list on your gambling site. There is also a possibility of developing your own games and listing them on the platform. Drafting a software-providing agreement can be a complex legal process, especially given that the owner of a crypto casino must pay a software provider to use their products. More to that, all credible gambling software providers will only agree to work with licensed and regulated online casinos.

Crypto gambling AML-CFT compliance

Both crypto and gambling are considered fairly risky and sometimes even shady business areas in the eyes of international regulators. Besides, crypto gambling can quite often become a hotbed for money laundering and financial terrorism, especially with no control over players and the millions of transactions they make every day. This is why a crypto casino that does not abide by the AML-CFT compliance requirements is not a good look. In order to obtain a Bitcoin gambling license, the future owner of a crypto casino must, among other things, pass the AML-CFT compliance check.

Whether you aim to license your crypto casino onshore or offshore, full AML-CFT compliance is required regardless of the regulator. The ultimate approach is to draft a complete AML compliance program, which will precisely outline the measures a company has implemented to prevent money laundering and financial terrorism. The program should be drafted in accordance with the licenser’s requirements: for instance, a European regulator will rely upon the 5AMLD, one of the EU’s AML directives which outlines the legal measures for combating money laundering associated with virtual assets.

KYC identification for clients of crypto casinos

In addition to the AML-CFT procedures, KYC/KYB checks are also indispensable parts of the compliance program. Within the due diligence process, regulators require casinos to conduct identity verification of their customers whenever they try to withdraw money from their account balance. Especially so when the withdrawal is processed from a crypto balance to a fiat wallet, online payment system, or bank card. Such conversion of crypto assets to fiat money is known as off-ramping, and regulators require applicants to identify their clients before approving off-ramp requests.

IT infrastructure and technical audit for crypto casinos

Cybersecurity is an indispensable part of any online casino, especially the one that involves crypto. Before applying for a Bitcoin gambling license, one should establish the IT infrastructure of the future company and ensure the security of clients’ data and transactions on all levels. The security measures most often include different kinds of encryption technologies implemented within the website.

Proper technical setup and regular cybersecurity audits are obligatory requirements in most jurisdictions. On the flip side, the more secure an online casino is, the more trust it gains from potential players. Henceforth, properly integrating cybersecurity into a crypto gambling platform means killing two birds with one stone.

Transaction acceptance in crypto gambling platforms

A crypto casino can accept client transactions in two main ways: involving solely cryptocurrencies or both crypto and fiat currencies. If the latter is the case, then a casino provides what is called on-ramping and off-ramping services. On-ramping involves converting fiat money into crypto during the depositing process to further use crypto for bets in casino games. Conversely, off-ramping is the process of converting crypto from the account balance to fiat while withdrawing it to a bank account or a digital wallet.

From the legal perspective, the licensing conditions will be different for crypto-only casinos and casinos that provide on/off-ramping. Henceforth, it would be wise to trust a certified legal professional to analyze the proposed business models and define the best regulatory route for a particular project.

In addition, it is important to establish policies for both deposit and withdrawal transactions to exclude the possibility of money laundering and fraud. The policies must include, among other things, the limits on how much users can deposit and withdraw within different periods of time, usually daily, weekly, and monthly. The limits can vary depending on the payment method chosen by the client. It is remarkable that casinos impose no limits on crypto-only payments whatsoever since KYC and due diligence rules apply only to fiat-related transactions.

Custody of clients’ funds on crypto casino websites

The custody of clients’ funds is another important aspect that is partly associated with the transaction processes. Some casinos, especially the ones dealing with fiat currencies, will be custodial of their customers’ funds, keeping them in inbuilt virtual gambling accounts. Others, in turn, won’t hold custody over customers’ money since players will connect and use their wallets directly.

While thinking over the implementation of banking solutions within a crypto casino, one must decide in advance whether the platform will be custodial over its clients’ money or not. Depending on this, different regulatory and compliance procedures will apply in the Bitcoin gambling license process.

How to get a Bitcoin gambling license

If a casino involves crypto-to-fiat transactions, it will require a crypto license. The crypto license will primarily concern the regulation of on-ramping and off-ramping services provided by the company. The choice of a fitting regulator will depend on the exact business models included in the project, the analysis of which can be provided by professional lawyers at LegalBison in the form of a legal opinion. A crypto license largely contributes to the overall trustability of a crypto casino, both from banks and potential clients. A very popular framework for web3 casinos is the Costa Rica crypto license.

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Gambling license for a crypto casino

If the games of chance presented on a crypto casino website pay out randomly, such a game platform will need a gambling license. A Bitcoin gambling license is a regulatory authorization that permits an operator to legally offer online gambling services where wagers are placed, processed, and paid out in Bitcoin or other cryptocurrencies.

The regulatory backbone is relatively similar for each jurisdiction issuing gambling licenses. To obtain one, a project will have to submit the following documents:

• the identities of beneficial owners in the form of passport or ID copies;
• proof of solvency and financial guarantees;
• detailed business plan;
• measures to ensure safe gambling and prevent addiction;
• certificate of non-criminal record for each of the beneficiaries;
• description of the e-gaming software provided on the platform.

The lawyers at LegalBison are aware of the importance of preparing these documents on time and without flaws. One of the most popular framework is the online gaming license in Nevis.

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Crypto Casino Regulations on Anti-Money Laundering procedures

When fiat-crypto-fiat transactions exist in the same ecosystem as gambling activities, regulators become particularly demanding with the AML-CFT compliance requirements.

This compliance should be permanent and seamless. The AML compliance program drafted during the licensing application process must not only establish the current level of compliance but also foresee any future breaches and serve as a basis for fixing them.

LegalBison’s lawyers are specifically meticulous when it comes to polishing the client’s AML-CFT compliance. Apart from drafting the compliance program from scratch, LegalBison undertakes to educate key shareholders on the importance of AML by providing course materials, as well as ensuring continuous compliance by conducting regular checks with the client and assisting it with reporting to the authority.

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Crypto Casino Regulations on Know Your Customer (KYC) policies

Every credible casino should identify its clients before allowing them to withdraw fiat money. The main purpose of the KYC procedure is to ensure the regulator that your casino is not financing any illegal activities and that the money goes to its rightful owner, i.e. the player who won it by gambling.

If your project includes the support of both crypto and fiat currencies, you will need an established KYC policy. LegalBison’s experience in assisting clients with customer verification will be a helping hand for this part.

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Crypto Casino Regulations on Security of User Funds

To ensure the cybersecurity of your crypto casino in full, you must start by studying the requirements of the chosen regulator. Safeguarding is an indispensable part of the licensing application, hence the safety measures must be implemented on the website in advance.

Some regulators, before approving a licensing request, will require you to conduct a technical audit of the company to ensure that there are no breaches in security. This will be an obligatory requirement which should not be overlooked.

Many startup owners don’t know where to start when it comes to ensuring cybersecurity. Through cooperation with LegalBison, one can find a reliable IT partner who will be ready to take up the technical side of the company formation.

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Alternative games on your crypto casino

It is possible to add alternative blockchain-based games and NFT games to some crypto casinos. GameFi is rapidly gaining popularity in the crypto sphere since it combines online gaming, which is so loved by many, with decentralized finance, thus creating an in-game economy. A good example is Axie Infinity, a blockchain game in which players can buy, sell, and trade collectibles called Axies.

The scope of possibilities is not limited to just blockchain-based games: you can also create your own metaverse, the likes of Decentraland or The Sandbox, where participants can purchase virtual land using digital assets and own NFTs.

In order to regulate blockchain-based games and metaverses and prevent possible complications on the legal side, it is mandatory to obtain a gambling license. LegalBison is experienced in streamlining the communication between applicants and regulators and assisting clients with obtaining a permit within the established timeframe.

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Bitcoin gambling license: Primary setup and registration

Whether your project needs a gambling license, a crypto license, or both at the same time, LegalBison takes care of it in full, ensuring the company’s full compliance.

The primary setup usually involves the following steps.

1. Assessing the business model and need for licensing: the lawyers closely analyze the scope of services the company plans to provide and assess the need for a license. This is a perfect way to map out the regulatory route of a company, especially in such a tricky legal matter as gambling. LegalBison takes the entire business model into consideration,
2. Company incorporation: after a detailed legal assessment, the lawyers design a proper legal structure adapted to the client’s activities. The process can involve either creating a company from scratch or purchasing an existing entity with a crypto or gambling license and tailoring it for the needs of the project.
3. Adding extra services: if a project includes games and products that require specific regulation, the lawyers assist the client with integrating them into the platform in a legally compliant way.

The primary setup includes a full business plan that is required along with a crypto casino license application form. Henceforth, LegalBison undertakes the preparation of the paperwork from A to Z.

Streamlining compliance with crypto gambling regulations (AML-CFT and KYC/KYB)

Both crypto and gambling licenses require unwavering AML-CFT and KYC/KYB compliance. Regardless of a license suitable for a particular project (the need for which is assessed by the lawyers), an AML compliance program is an integral part of the application package. LegalBison can take up all the necessary paperwork and set up the full AML/KYC compliance for a crypto casino. This includes drafting AML policies and risk assessment matrixes for the project.

Mandatory security checks for a crypto gaming platform

As soon as the company is all set, it is mandatory to conduct some preparatory work to double-check that the platform is safe for operation. The process starts with a cybersecurity audit to ensure the safety of clients’ funds and their personal data. Then comes stress-testing of the software and the revenue model, determining possible risks and eliminating them promptly. The job requires assistance from a tech professional and LegalBison can connect the client with a suitable expert upon request.