The American Gaming Association announced it has requested the Biden administration partner in the gaming industry’s efforts to support the Digital Assets Executive Order. The executive order puts in motion “a “whole-of-government effort” to promote the appropriate principles, standards, and best practices for governing digital assets, including cryptocurrencies and NFTs.
Because many gaming operators and regulators are considering the use of digital assets, the AGA is requesting “specific and appropriate guidance” as federal regulation begins.
The gaming industry has always been a leader in innovation and providing high quality entertainment to our patrons,” says AGA VP of Government Relations Alex Costello. “That’s no different when it comes to digital assets, but as a highly regulated industry, we must ensure that any adoption of new technology is done in a responsible and compliant manner.
According to Costello, digital payments have many benefits, including “consumer choice, convenience that aligns with most other purchases in customers’ daily lives, and responsible gaming tools to monitor gaming activity and set spending limits.”
Digital assets also allow operators to track transactions to combat money laundering through KYC (know your customer) efforts.
“Digital assets could provide similar benefits depending on how they are integrated and regulated,” Costello adds. “Blockchain provides a unique opportunity to track transactions, but for gaming purposes, the patron’s identity and location would need to be verifiable to properly implement KYC and AML protocols.”
Perhaps the biggest argument in favor of acceptance of digital assets by the gaming industry is increasing public awareness and use. According to a recent Pew Research Center survey, most U.S. adults have heard at least a little about cryptocurrencies like Bitcoin or Ether, and 16% say they have invested in, traded, or otherwise used a form of cryptocurrency. Men between the ages of 18-29 are particularly likely to say they have used cryptocurrencies.
Costello says it is up to individual operators to decide if they will adopt digital assets as a form of payment.
“What we want to ensure is that any federal regulation considers gaming’s unique circumstances, so operators have the choice to offer digital asset payment options and feel confident in their ability to remain compliant,” she says. “It remains to be seen how ubiquitous digital currency will become, but with gaming operations currently in 44 states, we have a vested interest in helping to shape how future financial instruments are regulated on a federal level.
The Executive Order also acknowledges that digital assets pose risks, including data protection, privacy, investment risk, cybersecurity, illicit finance, and sanctions evasion. It does seem like every news cycle brings news of fraud or accusations of malfeasance. On August 14, The Hacker News reported that authorities in the Netherlands announced the arrest of a software developer in Amsterdam suspected of concealing criminal financial flows and facilitating money laundering through Tornado Cash, a decentralized crypto mixing service. According to the Houston Chronicle, billionaire Mark Cuban, owner of the Dallas Mavericks of the NBA, last week was sued in the United States District Court for the Southern District of Florida for misleading investors through his promotion of cryptocurrency trading platform and brokerage Voyager Digital.
Costello says potential risks are why the AGA welcomes a holistic approach by the federal government to clarify the use of digital assets.
“Addressing any illicit finance vulnerabilities is a top priority for the gaming industry given our role as financial institutions,” Costello says. “As more of our business becomes digitized, the industry has already onboarded more sophisticated data and cyber protections but any expansion into cryptocurrency would mean taking additional steps to protect our business and customers and federal expertise would be welcome.”
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