As the sports betting and iGaming market takes its final shape in Brazil before its launch on January 1, 2025, the sector must adjust to the regulations set by the authorities. One of the rules prohibits operators from accepting payments with credit cards, cash, cryptocurrencies, or boletos. For Dmitry Starostenkov, CEO of EvenBet Gaming, the ban on cryptos demonstrates the government's commitment to ushering in a new era of safer online betting in the country.
The details of the new regulatory framework are outlined in a set of ordinances from the Secretariat of Prizes and Betting (SPA). Published in four stages over the past few months, these ordinances include technical requirements, anti-money laundering policies, online games, prohibited payments, compliance provisions, security measures, industry contributions, responsible gaming, and much more.
The rules determine that operators are prohibited from accepting payments in the form of credit cards, cash, cryptocurrencies (crypto), checks, or boletos. Instead, payments are facilitated directly between the operator and the bettor through electronic transfer.
In special circumstances — such as when a player wins a prize — institutions authorized by the Central Bank of Brazil can conduct transactions on behalf of the operator to ensure that the payment is completed within the stipulated 120 minutes.
Crypto is already a dominant payment method in Brazil
A recent study by Hibou revealed that about 68% of Brazilians bet, and the country is among the top ten largest gambling markets in the world. Until now, bettors who wanted to engage in online gaming could only do so on "offshore" sites regulated internationally.
Offering peer-to-peer transactions without the need for verification by a local authority, cryptocurrencies like Bitcoin are popular in jurisdictions without a locally regulated iGaming market.
Dmitry Starostenkov, CEO of EvenBet Gaming, believes that the ban on cryptocurrencies demonstrates the government's commitment to inaugurating a new era of safer online betting in Brazil.
"While cryptocurrency transactions are relatively traceable, they offer less control than classic fiat currency payments, as they do not require payment processing by any local institution (a bank or a regulated digital wallet).
"Brazil does not have an immaculate reputation when it comes to fraud, money laundering, and financial crimes. The recent regulatory changes in Brazil clearly show that the country's government is interested in controlling the financial flow in the iGaming industry and limiting offshore online gambling".
EvenBet Gaming already has a strong presence in South America and Latin America, having launched its award-winning poker platform in Colombia and partnerships with local operators such as FullReto and BetPlay to integrate its games into their platforms. As a leading provider of software solutions, it has also consolidated its position in South America through partnerships with operators in Peru and Argentina.
The company recognizes its recent growth in Colombia and Peru as one of the main contributors to a 37% increase in revenues in the first quarter. Hoping to continue its success in South America, EvenBet Gaming has shown interest in expanding into the upcoming Brazilian iGaming market. However, with online poker rooms integrated with cryptocurrencies making up a quarter of its software solutions, the provider must also navigate the benefits and disadvantages of SPA's ban on cryptocurrency payments.
The pros and cons of a cryptocurrency ban
While a percentage of EvenBet Gaming's profits come from its cryptocurrency poker solutions, the CEO also cites the benefits that arise from banning not only cryptocurrency payments but also cash, credit cards, checks, and boletos.
“This creates a very healthy competition among payment gateway providers, as long as speculations about restricting the payment system to a few specific providers prove false,” says Starostenkov. “In a situation where only digital transactions are allowed, the advantage goes to the provider who can show the best track record of chargebacks and failed transactions, while remaining accessible”.
The decision is a dilemma. In an attempt to limit the risks of financial crime and money laundering on licensed betting sites, banning cryptocurrency payments may push players away from locally regulated operators and towards offshore sites that accept cryptocurrencies.
“For regulators, it's a complex issue of balancing potential business growth with criminal and black market gambling risks,” explains Starostenkov. “The balance can be achieved by other means: applying KYC practices, responsible gaming measures, and AML checks, for example”.
If used by a licensed and regulated operator, cryptocurrency can be an effective tool for leveraging fast and secure payments. “When the operator uses a reliable cryptocurrency processing gateway, the transaction is instantaneous. There are fewer risks of fraud through chargebacks or withdrawal blocks. These benefits have made crypto the fastest-growing payment method in Southeast Asia and South America, and they can make a difference in Brazil”.
However, Starostenkov recognizes that, for a market as young as Brazil's, banning cryptocurrencies outright is “simply easier and quicker” than implementing the stringent privacy measures necessary to regulate payments to and from a betting site.
The ban on cash will impact both operators and unbanked Brazilians
The payment stipulations described in Normative Ordinance 615 are also problematic for licensed operators who rely on cash payments in a jurisdiction where legitimate digital transactions are often intercepted.
Starostenkov explains: “A significant portion of operators in Brazil and South America have relied on cash deposits and withdrawals through authorized agents and withdrawal points. This system is more reliable for players in some countries than often blocked digital transactions”.
“The new measures may lead players who are used to paying with Bitcoin or cash to choose the black market or offshore sites”.
Nearly 10% of the Brazilian population does not have a bank account, meaning cash is still an important form of payment. Regulated by the Brazilian Federation of Banks, the Boleto Bancário, simply known as Boleto, is a cash-based payment method unique to Brazil and one of the only methods available to those without a bank account. Boleto is a form of payment that will no longer be accepted under the new iGaming regulations, just like cryptocurrencies, checks, and credit cards.
Will cryptocurrency bans be a growing trend?
When the regulated iGaming market launches in January 2025, the betting landscape in Brazil will change dramatically. However, while the country is moving towards a cashless and cryptocurrency-free market, Starostenkov does not believe other jurisdictions will follow the same path.
“I do not believe that mature markets that have already introduced rigorous KYC checks would be interested in banning cryptocurrency payments,” he states. “In Europe, for example, to use crypto in an online casino, one must undergo strict identity checks twice, and a financial assessment is also required in some countries.
“Many regulators realize that banning fast and secure payment and withdrawal methods may lead a significant portion of bettors to illegal sites”.
“Younger jurisdictions, where anti-fraud and responsible gaming measures are still vulnerable, are more likely to introduce similar bans. Even in that case, I do not expect it to become a global trend”.
Source: iGB
