The Japanese House of Representatives recently passed a new crypto asset regulation affecting exchanges and custodians: the Payment Services Law and the Financial Instruments and Exchanges Law. However, the country’s crypto-gambling industry is subject to strict regulations. “Japan has very strict rules on gambling, and the same goes for crypto gambling,” Joseph D.Hugh, the chief financial officer of international cryptocurrency gambling platform Jukebucks, told Cointelegraph, adding:
“Although it is tough to prevent players from playing, the government monitors crypto transactions originating in Japan using taxes as an excuse.
However, Japan passed a federal law in July 2018 allowing land-based casinos in the country: “Japan will open its offline casino license to big players after the Olympics next year,” noted Hugh. “It needs to be clarified who will receive licenses for Tokyo, Osaka, Okinawa, and Hokkaido. Online casinos will only follow after offline casinos have started operating. The cryptocurrency industry has not yet felt Japan’s approval of “integrated resorts,” malls, theaters, hotels, and theme parks. Although Prime Minister Shinzo Abe introduced pro-casino legislation as part of his overall growth strategy, Japan has not been as receptive to crypto betting.
Crypto gambling in Japan
Cryptocurrency gambling is not as widespread in Japan as one might suspect, given the country’s track record of early implementation of cryptocurrency regulations, perhaps due to its experience with the collapse of Mt.Gox. This Japan-based cryptocurrency company went bankrupt in the Year 2014. In early 2019, blockchain network Tron, which claims to build the infrastructure for a truly decentralized internet, blocked gaming applications in its decentralized application store (app) in Japan under pressure from Japanese regulators. Tron’s proactive blocking of access to certain apps prompted Tron’s CTO and co-founder Lucien Chen to leave the team. He pointed to the contradiction between Tron’s commitment to decentralization and its actions, which Chen says are more inherent in those of a centralized entity.
How does cryptocurrency gambling work?
For the most part, blockchain-based gambling occurs in two ways: on-chain and off-chain. Off-chain cryptocurrency gambling includes land-based and online casinos that accept cryptocurrencies, mainly Bitcoin BTC worth $16,983 as a deposit. Method into an internet casino account. These merchants often use a third-party provider like BitPay to convert Bitcoin or another cryptocurrency into local fiat currency. However, there are online casinos that operate purely without fiat denominations and payout in Bitcoins.
Chain gambling takes place on a blockchain via smart contracts comprising a decentralized application (app) with back-end code running on a blockchain network instead of traditional centralized servers. It is much easier for governments to prosecute casino chains. Casinos on crypto gaming sites often ban IP addresses and prevent access from certain countries.
Chain casinos and other more decentralized or distributed online gambling methods are also not entirely immune to the impact of government regulation, as we saw with Tron’s refusal to show gambling apps to Japanese users, as Cointelegraph reported. However, Japanese netizens can use a VPN to access Tron gambling apps or blocked apps from anywhere. Cryptocurrency gambling continues to be a hot topic of discussion in Japan. However, official guidelines still need to be set.
A global snapshot of crypto gambling regulation
While most countries have official regulations governing online gambling, only a handful of nations regulate crypto gambling. These include the UK, Italy, the Netherlands, Greece, Poland, and Belgium. In many countries, bitcoin is not considered a legal payment method under existing policies, so it should not be used for gambling. More clarity is needed in several countries on this. Japan is the most notable example, where the gaming industry surpasses Nevada’s by more than $4 billion and is valued at $15.8 billion.