CAN CRYPTOCURRENCY INVESTMENT BE A HARMFUL FORM OF GAMBLING?
18 May 2022
Cryptocurrencies are fast emerging into the mainstream as a popular method of investment. Crypto-assets (crypto) such as currencies, coins or tokens are digital assets that do not have a physical form. They are a high-risk investment because they are volatile, often fluctuating huge amounts within a short period. As such, there is a lot of discussion about whether cryptocurrencies and investment trading are classified as gambling.
The view that such forms of trading are based on speculation and risk means that it is similar to gambling.
Concerningly, cryptocurrency exchanges are seeking social legitimacy through sponsorship deals with sporting codes in Australia, mainstreaming this activity without the stigma attached to traditional forms of gambling. Large scale sponsorship deals are occurring between AFL, NRL and Cricket clubs in Australia. Just recently, the AFL signed a $25 million deal with exchange site crypto.com.
Increasingly there are reports of gambling harm from cryptocurrency trading around the world, prompting the need for regulations of features that are similar to that of sports gambling.
Similar to other gambling products, there are elements that could enable harm to occur. For example, increased advertising will ensure that cryptocurrency trading will enter the mainstream market, especially if it is already linked to sporting codes where gambling is already normalised. Similar to sports gambling, the added element of social media aids cryptocurrency in becoming normalised, but currently without the stigma of gambling.
As crypto is not considered to be a financial product, the platforms in which it operates may not be regulated by the Australian Securities and Investment Commission (ASIC). As a result of this, Australia has emerged as a potential market.
A report published by the Senate Select Committee on Australia as a Technological and Financial Centre however proposes market licensing, taxation arrangements and regulations for ‘decentralised autonomous organisations’ that use blockchain technology for mining.
There are also worldwide concerns over the potential for money laundering and other criminal activity to be funnelled through cryptocurrency, as well as the environmental toll crypto mining has from consistently using electricity to power computers.
Cryptocurrency is a new and unknown concept to regulators, governments and public health advocates in Australia. Yet its harms are similar to that of online and sports gambling, creating the risk of harm in those that participate in the process.
That’s why the Alliance recommends implementing licensing and regulatory practices on cryptocurrency trading platforms that will help reduce harm from gambling.
Carol Bennett Chief Executive Officer