Crypto is too complex for one regulatory framework
It is not helpful to claim that crypto should be regulated as X. This is because the stuff we refer to as “crypto” no longer has a single-issue product and can be easily categorized into one framework. It might have been possible back in 2012 or 2013. Gambling might have been the best option back then.
Crypto consists of many programmable databases. They can host all kinds of applications, not just gambling ones. The range of activities in the crypto space has increased significantly since 2022.
MakerDAO is one example. MakerDAO was built on blockchain technology, which falls under “crypto”. It is not a gambling product. Functionally, MakerDAO can be described as a bank that issues deposits in the form of DAI (a stablecoin) and makes loans.
Making things even more complicated is MakerDAO’s ownership, represented by MKR tokens. These tokens also reside on a Blockchain and allow holders to vote on the bank’s operations. MKR tokens also give holders a claim to bank earnings. MKR tokens can be compared to Wells Fargo and Bank of Montreal shares. They can be considered investments.
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Regulating MakerDAO and its tokens – DAI, MKR – as gambling products wouldn’t make sense. Holding Wells Fargo and its underlying shares as a casino would also be awkward.
You can also look at decentralized tools like Aave or Compound, both built on blockchains. Both can be used as lenders. These tools are lenders, but they don’t serve a gambling clientele.
Consider centralized exchanges like Coinbase. Coinbase allows customers to buy and sell cryptocurrency with cash. It combines the functions of an E-Trade broker with a Nasdaq trading platform. We apply securities regulation to Etrade and Nasdaq but not gambling law and should probably do so for Coinbase.
Regulating crypto will take more nuance than simply throwing it all in the gambling category. Existing regulatory frameworks can be used to hold emerging blockchain-based products. Gambling is one example.
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It is long past time for crypto problem gambling to be recognized.
Although MKR, Aave, and Compound are not gambling, they may be considered to be. However, a large portion of crypto is gambling. This is because many people who use blockchains only bet on volatile first-generation unbacked crypto ins such as floki inu, Dogecoin, and Shiba Inu. We should remember bitcoin cash, bitcoin cash, bitcoin, xrp and ether.
The crypto industry has done everything possible to make volcanic betting more than just gambling. Coinbase, for example, views its mission to “increase economic freedom around the world.”
If you look at the details, you will see that a dogecoin like a dogecoin is nothing more than a 24/7 lottery on the average person’s opinion of the price of Dogecoin. The same recursive betting process drives the price of bitcoin, litecoin, and other violins. These never-ending lotteries allow users to sell their positions to other players.
Sometimes, casino chips can be used as a payment token. However, the primary function of violins is still their payment functionality.
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Officially recognizing volcanic-based gambling as a form is a benefit. It would also import into the crypto society’s protections for children and problem gamblers.
Problem gambling is a condition that causes a person to urge to gamble, despite the negative consequences. It can cause financial problems, relationship problems, depression, anxiety, and other mental health problems.
Gambling operators in many countries must implement self-exclusion programs to help customers ban gambling. Volcoins are now considered gambling, and venues offering these products, such as Kraken, Coinbase, and PayPal, would need to establish exclusion programs.
Responsible gambling messages must be displayed at all venues, such as “Play responsibly.” It’s only a game. MegaMillions’ play responsibly page provides information on problem gambling and offers a confidential 24-hour hotline.
These messaging standards apply to crypto. It would be illegal to present volcanic purchases as an investment to clients. Instead, platforms like Coinbase or PayPal must include disclaimers like “Play bitcoin responsibly.” It’s just a game.
Public advertising opportunities would be limited in many countries if violins were recognized as gambling. London was inundated with flooding ads by 2021. “Missed Doge? “Get Floki”, the advertisements said, appealing to people’s basic fears about missing out. The United Kingdom has strict regulations regarding gambling ads. If folks and other coins had been correctly classified at the beginning as betting games, then floki’s advertisement campaign would have faced many more hurdles.
Take Matt Damon’s famous “fortune favours brave” ad for Crypto.com, which ran in early 2022. It attempted to compare volcanic buyers with intrepid explorers. To attract bettors, the ad creators could not draw such dubious analogies by regulating violins like betting.
Gambling regulatory frameworks in countries like the U.K. prohibit gambling operators from advertising to children if crypto-platforms used by minors (like Block and Kraken) to conduct volcanic betting would be considered gambling.
Finally, the United States has some restrictions on the ability of gamblers to finance their activities with credit. This is similar to the United Kingdom. This is done to stop a problem gambler from becoming a financial crisis that causes more damage to the family. This rule could be translated to crypto casino by limiting access to margin and not allowing customers to purchase violins using credit cards.
The idea of applying crypto regulation should be clarified. Many blockchain-based activities aren’t gambling and should not be regulated. However, a large portion of blockchain-based activities is gambling. It’s high time that we recognize this and handle it accordingly.