Malta Eyes Better Regulations for Virtual Tokens and NFTs

Posted on: November 10, 2022, 12:07h. 

Last updated on: November 10, 2022, 05:23h.

The gaming industry will undergo a number of changes over the next decade, including a greater emphasis on digital operations. The Malta Gaming Authority (MGA) is currently looking to establish regulations for some of the newer innovations coming to the gambling space.

Malta Gaming Authority
The Malta Gaming Authority’s sign hangs outside its office. The gaming regulator is embracing non-fungible tokens and other digital technologies as online gaming evolve. (Image: Times of Malta)

The MGA announced Wednesday that it’s initiating a stakeholder consultation to develop proposed policies for the use of technology in gaming, such as virtual financial assets (VFA), virtual tokens, and non-fungible tokens (NFT). The digital solutions are slowly becoming integrated into the ecosystem, but a lack of regulations is hindering responsible growth.

Just like cryptocurrencies, NFTs have faced mixed reactions. Metaverse casino Slotie, which faces regulatory backlash in the US, is a perfect example of why regulations are necessary.

The MGA’s consultation covers its self-defined “Guidance on the use of Innovative Technology Arrangements and the acceptance of Virtual Financial Assets and Virtual Tokens through the implementation of a Sandbox Environment.” The authority wants interested parties to participate in the sandbox environment, which will run through December 31.

MGA Ready for NFTs

Initially, the sandbox was to have already expired. In March of last year, the MGA announced that it would extend the sandbox until the end of this year. At the same time, it introduced certain updates that would align with the changing gaming environment.

The initiative aims to introduce a more structured and refined point of contact between MGA and industry stakeholders. It also invites dialogue on regulatory topics that are shaping the industry.

The MGA will host a regulatory workshop to discuss the proposed policies. It will soon begin to send out invitations to prospective industry insiders, preparing for the workshop in December.

Subsequently, it plans to introduce a new policy, which will present its position on accepting virtual tokens and using internet technology assets (ITA). It will also cover distributed ledger technology platforms and smart contracts by authorized operators. The ongoing consultation allows these interested parties to submit their possible feedback on the proposed policy updates. The consultation period runs until December 14.

A New Era in Gaming

NFTs are a relatively new type of digital asset popular in the world of cryptocurrencies. They are indestructible digital objects stored on a blockchain, which means they cannot be modified or deleted by anyone.

This makes them ideal for storing digital collections, such as works of art, musical pieces, or other digital content. Some well-known examples of NFTs are Crypto-Kitties, a digital cat game that runs on the Ethereum blockchain, and Decentraland, a virtual world builder based on Ethereum.

Players could place their bets in NFTs and see if they have won or lost. The use of NFTs in online gambling is already catching on, and technology is becoming more common in other areas.

Since NFTs can verify and secure ownership of a digital item, it stands to reason that they can also be used in gambling. So far, no platform specifically uses NFTs for betting. One that comes close is Stakes, which allows bettors to create a permanent blockchain record of their wagers as an NFT. Still, it’s only a matter of time before other options arrive