Crypto Casino
Torrent Gear
How cryptocurrency transactions are regulated in casinos
Introduction: "two licenses, one movement of money"
Cryptocurrency transactions in iGaming almost always fall under a double contour:1. Gambling regulation (license of the operator/supplier of games, protection of players, payments, complaints).
2. Financial regulation of virtual assets (rules for VASP/crypto service providers: AML/CFT, sanctions, Travel Rule, asset storage).
This practically means: even if the casino has a gambling license, crypto payments require a separate regulatory discipline - through its own VASP status or through partners (exchanges, on/off-ramp providers, custodians).
Who controls "what": roles and responsibilities
Gambling regulator: permitted products (online casinos/bets), segregation of player funds, payment/complaint procedure, Responsible Gaming, technical audit of games.
Financial supervision/financial monitoring: AML/CFT program, KYC/EDD, sanctions lists, suspicious transactions (SAR/STR), Travel Rule.
Banks/PSP/on-ramp/off-ramp: own level compliance, sources of funds, reporting, limits.
Chain analytics/screening providers: risk assessment of addresses/transactions (mixers, hacks, darknet tags, sanctions).
Crypto Transaction Life Cycle (Short)
1. Deposit to a dedicated address (usually a unique wallet within an HD tree).
2. Chain auto-screening: address and UTXO/token risk (sanctions, hacks, high-risk services).
3. KYC/EDD Triggers: Sum, Frequency, Jurisdiction, Behavior, → Depth Selection
4. Enrollment after the required number of confirmations and passing policies.
5. Game activity under the control of RG (limits, reality check, anti-bonus abuse).
6. Conclusion: repeated chain screening, comparison with sources of funds/income, sanctions/geo.
7. Logs and reports: unchanging journals, reporting to the regulator/financial monitoring.
AML/KYC: How it works for crypto
Customer identification (KYC): document + liveness, age verification, address (PoA), at risk - Source of Funds/Wealth.
Risk scoring: country, payment route, behavioral patterns, volume and frequency of transactions, connections with "toxic" addresses.
EDD (in-depth verification): for high limits, anomalies, RAP/sanctions matches, complex transaction chains.
SAR/STR: generating and sending suspicious transaction reports according to established rules.
Segregation of funds: accounting for client assets separately from operating assets.
Travel Rule: data transfer between VASPs
When transferring beyond the established thresholds, crypto providers must transmit a "minimum packet" of sender/receiver data (an analogue of wire requirements in fiat). For casinos, this means:- Use compatible Travel Rule providers
- block/delay transfers if the second party is not able to accept/verify the data;
- store confirmations and data exchange receipts.
Sanctions, geo-constraints and block lists
Sanction lists and PEP screening - at the registration stage and at each significant operation.
Geoblock: prohibition of entry/play/payments from prohibited countries, VPN control, fingerprint device.
Service block lists: mixers, "privacy services," exchanges without KYC, addresses related to hacking/phishing.
Whitelists: Proven on/off-ramp and customer wallets to speed up the next withdrawal.
Chain analytics: what they watch and why they refuse
Source of funds on-chain: the path of tokens, the share of "dirty" UTXO.
Address profile risk: coverage of risky services, intensity of incoming/outgoing, cluster connectivity.
Evasion patterns: swaps to DEX before withdrawal, repeated hops through bridge/mixer, "smearing" to multiple addresses.
Red flags: sudden large deposits from high-risk exchanges, "chains" after known exploits, entrances from sanctions zones.
Custody and security of funds
Custodial model: the operator (or his custodian) stores the keys. Hot/warm/cold policies, multi-signatures, limits, 4-eyes, emergency procedures and regular reconciliation are required.
Non-custodial tricks: destination addresses and instant swaps from partners; less storage risk, more reliance on external VASPs.
Segregation of client funds: separate accounting is required, prohibition of mixing with the operational cache.
Incident-response: action plan for hacks, leaks, key compromise, notifications to customers/supervision.
Stablecoins, tokens and on-chain mechanics
Stablecoins reduce volatility, but require issuer DD and rules of use (sanctions, listings).
Utility tokens/loyalties: possible in the absence of signs of a security; must be transparent T & C.
Provably fair: commit revil, public sides, player verification, storing hash logs for disputes.
On-chain jackpots/pools: you need to audit smart contracts, restrict admin rights, pause/upgrade mechanisms.
Responsible Gaming (RG) and Crypt
Limits on deposits/bets/time are equally required for crypto players.
Reality check and cooling-off - reminders and pauses during a long game.
Self-exclusion and integration with state registers (where available).
Marketing: banning misleading claims and targeting vulnerable groups - regardless of currency.
Accounting, reporting and data storage
Regulatory reports: GGR/turnover, RG activity, payment windows, suspicious transactions, register of complaints/decisions.
Immutable logs: cryptographic event stamps (deposits/outputs/spins) suitable for forensics and auditing.
Storage: terms and formats strictly according to requirements (often 5-10 years); access control and e-signature.
How compliance is "sewn" into the product (by design)
1. Policies as code: machine-readable rules by jurisdiction (limits, verification, advertising).
2. KYC/AML orchestration: provider selection, retray, fallback, automatic SAR draft.
3. Regulator API/e-filing: automatic reports, receipts, webhooks of statuses.
4. Dashboards: SLA payments and complaints, share of on-time filing, RG coverage, sanctions alerts.
Metrics that oversight looks at (and banks)
On-time filing (timeliness of reports).
KYC TAT (average verification time).
SAR/STR hit-rate (high-quality submission of suspicious transactions).
RG coverage (% of players with set limits).
Chargeback/disputes/complaints and median closing time.
Percentage of funds deposited in segregated accounts.
Common mistakes and how to avoid them
1. "There's a gambling licence - enough is enough." No: the crypt needs a VASP loop or VASP partners.
2. Lack of chain screening at the entrance/exit - a direct risk of blockages and fines.
3. Custody "for good luck" without multi-signatures, limits and magazines.
4. Ignore Travel Rule - blocks of transfers and a ban on correspondent relationships.
5. Risk-free marketing and bonuses without transparent T & Cs - complaints, sanctions, reputational losses.
6. Manual reports in Excel - errors, deadlines, "lost" data.
Practical checklist for launching crypto payments in a casino
- Jurisdictions and model are defined: own VASP or partner-VASP/on-off-ramp.
- AML program: CDD/EDD, sanctions/PEP, chain screening, Travel Rule provider.
- Custody policy: hot/warm/cold, multi-signatures, limits, emergency procedures.
- RG contours: limits, self-exclusion, reality check, reports.
- Bonus/T & C policy: vager, games contribution, cap on winnings, timing, bans on abuse.
- Auto-reporting and immutable logs; deadline calendar and e-signature.
- Geoblock and anti-VPN, lists of prohibited countries/services, whitelists PSP.
- SAR/STR procedures and communication channels with the financial monitoring/regulator.
FAQ (short)
Is it possible to accept a crypt without VASP status?
Only if the entire crypto part goes through an approved VASP/PSP provider and this is allowed by local rules. A gambling licence alone does not cover this.
Do I need KYC on every output?
No, but amount/frequency/risk triggers may require EDD and request additional documents.
What to do with addresses after hacks/exploits?
Block routes, save logs/hash evidence, generate SAR/STR, interact with analytics providers/law enforcement officers.
Is stablecoin better than bitcoin?
For UX and accounting - often yes (less volatility), but compliance requirements and sanctions risks still apply.
Regulation of cryptocurrency transactions in casinos is systemic compliance engineering: gambling license + VASP discipline, AML/KYC + Travel Rule, chain analytics + custody, RG + transparent T & C. Operators who turn these requirements into product architecture (policies like code, automatic reporting, built-in RG tools) gain access to banks and payment providers, reduce regulatory risks and increase player confidence - which means they win on a scale and economy.