Obtaining A Gambling License: Key Challenges That May Arise

Table of contents Overview of the Curaçao gambling industry Curaçao, a Dutch Caribbean Island operating as an integral country within the Kingdom of the Netherlands, has been and till now remains a popular choice for startups and other companies to receive online gambling license due to it accessible regulatory thresholds, cost-efficiency, and simpleness of establishing a business. Nevertheless, this jurisdiction also cannot be apart from the need of legislative developments and up to now Curaçao’s government is in process of revising its gambling laws, encompassing online gaming, to meet global standards and combat unauthorized gambling activities. This revision entails the creation of the Curaçao Gaming Authority, an independent supervisory entity, and an overhaul of existing licensing classifications. Curaçao as a hub for online gambling operators Throughout the years Curaçao has approved itself as a premier hub for online gambling operators, drawing businesses around the globe seeking favorable regulatory conditions and operational flexibility. This jurisdiction has all chances to remain a premier hub for online gambling operators since the latter can receive the following benefits from existing licensing regime: All-in-One License: Curaçao offers a single that covers all forms of online gambling, including casinos, sports betting, and lotteries. However, this might change after enactment of National Ordinance on Games of Chance, as separate licenses for B2C and B2C activities are expected to be introduced. Cost-Efficient: The Curaçao gaming license is relatively affordable in terms of application, issuance, and maintenance fees. Global Reach: With a Curaçao gaming license, operators can cater to a global audience, although certain jurisdictions may be restricted. Tax Benefits: Curaçao boasts a beneficial tax regime for online gambling operators, typically offering a zero-tax rate on gaming revenues. Flexible Technical Requirements: While it is essential to ensure fairness and security, Curaçao’s technical requirements for gaming systems are more lenient than in some stricter jurisdictions.   Licensing of online gambling in Curaçao To understand the Curacao gaming license changes in full it is worth having insight on how licensing functions were transmitted among different Curaçao authorities and entities throughout near time periods. Preconditions to regulatory shift Before the commencement of the recent regulatory changes, Curaçao gambling licenses came in two forms: the master license and the sub-license. Holders of the master license had the authority to both offer a broad range of gambling services and bestow sub-licenses to others private companies. The license issuance is governed by the National Ordinance on Offshore Games of Hazard (Landsverordening buitengaatse hazardspelen, P.B. 1993, no. 63) (NOOGH). The sub-license allowed its holders to engage in a comprehensive suite of gambling activities, encompassing sports betting, slot machines, table games, and RNG-centric games. Its validity extends as long as the linked master license remains valid. There were, and currently are, four master license holders, who, since 1996, have received the government’s authorization to grant licenses:   Antillephone N.V. License #8048/JAZ Curacao Interactive Licensing N.V. (CIL) License #5536/JAZ Cyberluck Curacao N.V. (also known as Curacao-eGaming)License #1668/JAZ Gaming Curacao License #365/JAZ   The current state of Curaçao’s online gambling license Existing license framework can be named transitional between previous license conditions and renewed and strengthened license framework. This period can be described as preparation for the creation of the Curaçao Gaming Authority and new license requirements. Under this transitional framework gaming licenses can be issued only by Curaçao Gambling Control Board (GCB) and not by four master licenses holders as it was before. From November 15, 2023, the GCB started accepting and processing online gaming license applications from operators that wish to conduct their business under Curaçao offshore gaming license. Simultaneously, a significant number of operators – in practice referred to as sub-licensees – are currently operating under one of the licenses granted to four of the master license holders on the basis of the NOOGH and in order to continue their business under such license such operators must be registered through GCB portal. Any sub-licensee wishing to continue operating in Curacao but has not applied for a direct license prior to established period, can only continue operating under their sub-license until the master license expires or when the new license framework enters into force, whichever date is sooner. New license framework The government of Curaçao is currently in the process of realizing a complete reform and modernization of its (online) gambling legislation through a new law that will be named the National Ordinance on Games of Chance (Landsverordening op de kansspelen (LOK)). In anticipation of the entry into force of the LOK, the gaming license function were transferred to the GCB under condition that if operator obtained a direct license from the GCB under the current law, prior to the LOK entering into force will, according to the current draft of the LOK, such license will automatically be converted to a provisional license when the law enters into force. It is planned that the GCB will be granted some new powers and will continue to exercise its powers under a new name: the Curaçao Gaming Authority. Up to now LOK has been drafted and is at the stage of consideration and discussions within the legislative authority. Simultaneously, the Curaçao government is considering the possibility to temporarily exempt from the new legislation operators who, at the time that the new law enters into force, offer remote gaming under a license granted under the NOOGH so that they can temporarily continue to operate during this period without needing to apply for a license immediately. Regulatory framework Currently, the main Curacao gambling laws that establish rules for receiving a gambling license and conducting a gambling business under such a license are as follows:   National Ordinance on Offshore Games of Hazard (Landsverordening buitengaatse hazardspelen, P.B. 1993, no. 63) (NOOGH): NOOGH generally set forth the necessity of licensing to conduct offshore games of hazard business and defines the main state body responsible for issuance of gaming license or/and delegation of this function to other authorities. National Decree supervisor identification when rendering services gaming sector (Landsbesluit toezichthouder identificatie bij dienstverlening kansspelsector,

Table of contents Understanding the Regulatory Landscape Throughout the development of the first cryptocurrency till the creation of the entire crypto world, cryptocurrencies have faced a lot of different challenges. The most critical challenge faced by cryptocurrencies is their status since different jurisdictions created their own regulatory framework, hence there is a worldwide trend of increasing institutional adoption of crypto. Making cryptocurrencies publicly available, transferable, liquid, manageable and freely tradeable is one of the main functions of cryptocurrency exchange. More precisely, cryptocurrency exchanges serve as intermediaries that greatly simplify access to cryptocurrencies for different individuals and legal entities and make it easy to buy and sell with low fees and strong security features. In that matter, let’s have a more exact glance at cryptocurrency exchange as a business. A cryptocurrency exchange is an online platform hosted by companies or other entities that make it convenient for users to purchase and sell cryptocurrency. In general, cryptocurrency exchange can be classified as centralized (“CEX”) or decentralized (“DEX”). Below we provide a short overview of the differences between them: Operate under the control of a central authority or intermediary. Token listing on CEXs typically involves a centralized decision-making process. Management of such crypto exchange normally evaluates and approves crypto projects considering their compliance’s level, legal and financial documentation etc. Operate on decentralized networks, utilizing smart contracts to enable peer-to-peer trading. Token listing on DEXs is often more open. Crypto projects can be listed by developing smart contracts that integrate with the exchange protocol. Listing decisions are often driven by community governance instead of centralized authority. Typically, DEXs do not require user verification or adherence to AML regulations. At the same time, due to the complexity of such a type of business, there is a necessity to establish and configure a great number of processes, thus different aspects of such a business become subject to a great number of regulations. Hence, the survival and prosperity of crypto exchange business depend on regulatory crypto compliance in the ever-changing world of cryptocurrencies. Cryptocurrency exchange must satisfy compliance with numerous standards established by regulatory authorities both separately developed for the cryptocurrency market and established for other essential aspects of cryptocurrency exchange’s product. Those regulations include rules regarding consumer safety, security, and transparency. Essential Compliance Practices for Cryptocurrency Exchanges Whereas not all jurisdictions have adopted sophisticated legislation that set forth clear rules of managing and carrying out a crypto business, it is worth analyzing the position and interpretation of effective laws issued by the relevant financial services regulators (if there is no separate crypto regulator). Also, in light of possible oncoming massive adoption of different laws regulating different crypto-related matters, there will be a need for monitoring applicable legislative changes and in advance preparation of your cryptocurrency exchange for such changes. The most important issue for cryptocurrency exchange is implementing the following crypto compliance practices: AML and KYC requirements: KYC is a fundamental compliance requirement. Exchanges must verify the identity of their users to prevent fraud, money laundering, and other illegal activities. This involves collecting personal information such as name, address, date of birth, and government-issued identification, etc. AML regulations require exchanges to monitor transactions for suspicious activities and report any that may indicate money laundering. Under these regulations, cryptocurrency exchange must have in place and implement robust transaction monitoring systems, procedures, and processes of maintaining records of large transactions and conducting regular audits of its systems and monitoring processes. Licensing and Registration Requirements: Throughout the existence of cryptocurrencies different jurisdictions established some rules for providing services related to operations with cryptocurrency. Depending on jurisdiction these rules vary and can include anything from authorization for AML purposes like in several EU countries (under the current regulatory framework) to payment licenses (for example, in Singapore) and money services company registration. Adhering to these standards is vital to run your cryptocurrency exchange lawfully and keep its credibility. Data Protection and Privacy Regulations Guaranteeing privacy and protection of user data is one of the cornerstones of crypto exchange business, as respecting and following local privacy laws, such as GDPR, CCPA, PIPEDA and others, and implementing strong and advanced security protocols, user permission for data processing, and open data handling procedures shall increase client confidence and strengthen asset security by fostering trust and lowering the danger of data leaks. Consumer Protection Regulations: Customer protection is of utmost importance in the realm of cryptocurrency exchange security. Consumer protection laws set forth requirements related to fair trade practices, fraud prevention, and dispute resolution. Provision of timely information, clear fee schedules, and channels for user input are all necessary for crypto compliance. Strategies for Navigating Regulatory Compliance Navigating the complex regulatory landscape for cryptocurrency exchanges requires a proactive and comprehensive approach. Hence, below you may see general tips implementation of which can help crypto exchanges manage and ensure regulatory crypto compliance: Establish a Dedicated Compliance Team Hire Experts: Form a team of seasoned professionals with expertise in financial regulations, cryptocurrency laws, cybersecurity, and risk management. It is highly recommended to include in this team experienced compliance officers, legal advisors, and internal auditors. Continuous Training: Implement an ongoing training program to keep staff updated on new regulations, emerging threats, and best practice. This ensures that the team is always prepared to handle compliance challenges. Develop and Maintain Comprehensive Policies and Procedures Compliance Manual: Draft detailed manuals in each compliance field outlining all relevant compliance requirements, operational procedure, and regulatory guidelines. Regular Updates: Update policies and procedures regularly to reflect changes in the regulatory environment and industry best practices. Engage with legal expert to receive consultation on interpretation of new regulations and the ways you may incorporate necessary changes. Documentation: Maintain comprehensive records of all compliance activities, including, but not limited to, transaction histories, audit trails, communication logs with regulators, training sessions, security breaches history and measures used to overcome it, etc. Establish Strong Internal Controls and Governance Governance Framework: Develop a comprehensive governance framework that clearly defines roles and responsibilities, and accountability for compliance management. This

Table of contents Cryptocurrencies are digital assets that operate on decentralized networks, free from the control or interference of any central authority. They offer a new form of individual empowerment, innovation, and financial inclusion. However, not all countries share the same vision or enthusiasm for the crypto industry. In the dynamic landscape of cryptocurrency, the world is witnessing an evolution that involves regulators, investors, and businesses. This innovative sphere has garnered attention, sparking reactions from countries worldwide. When exploring crypto-friendly countries, it is easy to notice how differen could be approach of countries to this new sphere. Some nations are welcoming this financial revolution with open arms, some adopting a neutral stance, and others proceeding with caution or imposing restrictions or outright bans. In this article we will go through the crypto landscape of most crypto friendly countries, where nations navigate this transformative wave with highest perspectives and friendly approaches. What does it mean for a country to be “crypto-friendly”? The term “crypto-friendly” means a country’s positive disposition and supportive ecosystem for the development and utilization of cryptocurrencies and blockchain technology. Such nations typically exhibit several key characteristics:   Clear and Favorable Legislative Regulations: countries with crypto friendly regulations that provide legal certainty and protection for both cryptocurrency businesses and users are commonly consider as crypto friendly countri This legal clarity fosters a conducive environment for the growth of the crypto industry. Low or No Taxation on Crypto Transactions: crypto-friendly countries often have low or no taxation on crypto transactions and profits, or they may offer incentives for engaging in crypto-related activities. This encourages businesses and individuals to participate in the crypto market without undue financial burden. However, this criteria is not mandatory. Sometimes countries with high tax rates are also among top crypto friendly countries, because of the general welcoming approach to crypto. Active Cryptocurrency Community: A vibrant and active cryptocurrency community is a hallmark of so called “best country for cryptocurrency”. This community comprises investors, traders, developers, entrepreneurs, educators, and enthusiasts who contribute to the ecosystem’s dynamism and growth. High Rates of Cryptocurrency Integration and Adoption: Crypto-friendly countries witness high levels of cryptocurrency integration and adoption, not only within the public and private sectors but also among the general population. This widespread acceptance contributes to the mainstreaming of cryptocurrencies. Availability of Crypto Infrastructure: The presence of a significant number of Bitcoin ATMs and other crypto services is indicative of “best countries for crypto”. This infrastructure facilitates easy and convenient access to the crypto market for users. Robust Security Measures: To mitigate risks associated with the crypto industry, crypto friendly countries implement robust security measures and best practices. These measures aim to prevent cyberattacks, fraud, theft, and other potential threats to ensure the safety of participants in the crypto ecosystem. Crypto-friendly countries are often recognized as pioneers and innovators in the global economy. By embracing the potential of cryptocurrencies and blockchain technology, these countries position themselves to create new opportunities, solutions, and value. Additionally, they benefit from the increased competitiveness, efficiency, transparency, and inclusiveness that the crypto industry brings to their economic landscape. While a countries’ crypto friendly status is significant, choosing the best country for crypto for your specific business requires careful consideration of various factors. InteliumLaw offers specialized expertise to help you navigate the complexities of crypto regulations and choose the most suitable environment for your project. The 10 Best Countries for Cryptocurrency El Salvador Pioneering Financial Inclusion: El Salvador made history in September 2021 by becoming the first country to adopt bitcoin as legal tender. This made El Salvador one of the most bitcoin friendly countries. The government aimed to promote financial inclusion by encouraging citizens to use cryptocurrencies. Despite facing challenges in implementation and acceptance, El Salvador’s move showcased a bold approach to embracing decentralized currencies. The government offered financial incentives to citizens, and a dedicated cryptocurrency app was introduced to popularize and regularize bitcoin use.. Strategic Citizenship through Bitcoin “Donations”: In December 2023, El Salvador’s Congress approved a migration law that grants expedited citizenship to foreigners making bitcoin “donations” to government social and economic development programs. This innovative strategy further emphasizes El Salvador’s commitment to leveraging cryptocurrency not only for national economic strategies but also for global collaboration and development efforts. Thus, it could be ranked among the best crypto friendly countries. Ongoing Challenges and Opportunities: While El Salvador’s endeavor to embrace cryptocurrencies has garnered attention, there are challenges in achieving widespread adoption. Not all businesses comply with the requirement to accept bitcoin, and the country faces the task of overcoming barriers to implementation. The ongoing developments in El Salvador provide an intriguing case study for countries considering similar approaches, illustrating the complexities, benefits, and potential pitfalls of integrating cryptocurrencies into the fabric of a nation’s economic system of best crypto countries. Malta Blockchain Regulatory Haven: Malta has strategically positioned itself as a global hub for blockchain and cryptocurrencies, and therefore one of the most crypto friendly countries. The Virtual Financial Assets (VFA) Act provides a robust regulatory framework, distinguishing between various virtual assets. Malta’s regulatory environment fosters innovation while ensuring consumer protection and market integrity. The country’s commitment to blockchain regulation has made it an attractive destination for numerous crypto-related businesses, including exchanges and wallet providers. With membership in the European Union, Malta aligns its regulations with international standards, exemplified by its adherence to the Market in Crypto-Assets Regulation (MICAR). Diverse Classification of Virtual Assets: Malta’s VFA Act classifies virtual assets into categories such as utility tokens, electronic money tokens, financial instruments or security tokens, and VFAs (Virtual Financial Assets). This clear classification provides legal clarity for businesses and investors, setting a precedent for other jurisdictions. Given that it might be named as one of the “best country for cryptocurrency”. Continued Alignment with International Standards: Malta’s proactive regulatory stance continues to evolve, with an eye on international developments. As of April 2024, member states are expected to transpose the new Market in Crypto-Assets Regulation into national law. Malta’s alignment with these regulations