iGaming Daily

Anaya McDonald (00:01.581)
Welcome back to another episode of iGaming Daily as we are joined by special guest Elton Dimeck, Managing Director of Crypto Processing Solution Company Payhound. I'm Calum Williams, Senior Business Journalist for Payment Expert and today Elton and I will be taking a wider look at the markets in crypto assets regulations, also known as MECA, and how it has begun to shape not just the European crypto sector but also crypto gaming as a whole. But firstly, welcome Elton, great to have you on the podcast today.

How has the start of the new year been for you so far?

Elton Dimech (00:32.227)
Thank you for having me, Kalem. Obviously, it was quite busy already because we had one of the events held in January, so where Payhound has exhibited as well. we had quite an eventful January so far.

Anaya McDonald (00:48.895)
so a great start to the new year as it is. And I'm sure it will be for the rest of the year for you and Payhound. But like I said at the opening, we're to be talking a lot about Mika, which is the which has just been brought introduced last year in terms of being able to oversight every crypto activity within the European Union introduced by the European Central Bank. So firstly, Elton, from your viewpoint, what are the early impacts of Mika? I know it was.

It came into effect last June, so how has Meeka impacted the European crypto landscape from a compliance perspective?

Elton Dimech (01:26.648)
Yeah, so to be fair, it was a phased approach and the introduction of Mika started on 30th June for the stable coin requirements. So it was more for the issuers rather than the crypto asset service providers like ourselves. Our deadline, our entry into the markets and crypto assets regulation was on 30th of December, so not that far away.

from today. The idea of the regulation was always to try and harmonize the regulatory framework when it comes to crypto within the EU. So the idea of the European Union there was seeing that crypto was starting to become quite an important part of certain jurisdictions. And up until then,

there were a lot of jurisdictions that were deciding themselves how to regulate if they wanted to regulate crypto. With the introduction of this regulation, the idea was to have harmonization between all the member states and therefore eliminate that arbitrage that there was between the different member states. The idea behind it is also to increase

awareness about customer protection, trading price, and we've seen a lot of different aspects relating to assessment on the individuals that would be managing the company, capital requirements, all these sorts that are normally very much accustomed with in the traditional financial services industry because we see a lot of copy in those in this regulation that emanates from

other already established EU wide regulation. The thing is that, however, the EU has also offered to the member states a grandfathering period, meaning that certain jurisdictions decided on when the crypto asset service providers or VASPs at the time were at which point in time they

Elton Dimech (03:51.365)
will need as a deadline, they will need to transition into becoming a market crypto assets compliant company. So like Bayhound at the moment, we are currently in that transitioning phase where we have applied for Mika compliance and we're in the final stages of becoming compliant. So to be fair, there is still a bit of arbitrage because some companies have started getting Mika licensed, some others...

have taken more of a wait and see approach because the regulation in itself was not that clear. In fact, there was a lot of instances where certain crypto exchanges and European crypto asset service providers throughout Europe have taken very different approaches and decisions that differ from one another.

Anaya McDonald (04:29.273)
Mm-hmm.

Anaya McDonald (04:45.815)
Yeah, it definitely seems like a many, companies are going down different routes at the minute. And I know that one of Mika's early enforcements around stable coins, like you mentioned, the delisting of some stable coins within already on certain crypto exchanges. I know that I believe it was Bitstamp that was forced to delist the Tether European backed stable coin, the EURT one. And that kind of got me

questioning have any crypto casinos betting companies that you may know of have they become a lot more wary about the type of tokens stable coins etc that they are making available to players

Elton Dimech (05:27.987)
Yeah, we have not really seen the impact at the moment because as you might have seen in articles out there, most of the EU exchanges, even though it was quite clear in the regulation that they should not continue offering non-compliant stablecoins, there were many exchanges that kept on offering.

USDT. What happened on the 17th of January, so about two weeks ago, there was an ESMA statement where it requested the national competent authorities, which is essentially the financial services regulators in each member state, to start a phasing out process. So for any non-compliant stablecoin, there is

ultimately a deadline as to when these exchanges should offer it. When it comes to crypto casinos or traditional casinos that are offering crypto as a payment method, obviously this means that they will need to start educating themselves into what other tokens or coins may be more preferable. It's not easy because most of the

players that most of the merchants are accustomed with USDT, which is the major stable coin, which unfortunately will have to be delisted at the end of quarter. But obviously there are other tokens and other coins that are in some way cheaper to transfer that may be promoted even more now that there will be this sudden shift of

deposits, I'm assuming, from players that will have to come into the merchant's account in different coins. So the ability to offer cheaper coins when it comes to transferring those coins is most probably what will happen.

Anaya McDonald (07:39.991)
Yeah, that's really interesting to know that there's some like USDT, USDC, are two of the comfortably most, largest stable coins in the market right now. And that's quite interesting to hear that Mika is almost kind of being a bit more stringent with those type of stable coins and stable coins as a whole, as we know now is becoming a very popular within cross border payments and being a real payment facilitator for the crypto industry, I guess. And that kind of me thinking a bit more Elton about how

And with your experience and Payhound's experience with Mika at the moment, I know, like you said, you've got this this grace period at the moment. But in terms of the regulations being able to grow the company in terms of scale, customer base, et cetera, do you believe the regulations are doing more at the moment to help or hinder certain crypto companies like yourselves?

Elton Dimech (08:32.417)
I'll be honest in this answer. Obviously, only a weeks have passed, and we have not seen the full repercussions of Mika. I think in a general spectrum and in the longer term, it might mean that it will be a positive approach that the EU

Anaya McDonald (08:36.013)
We like a bit of honesty.

Elton Dimech (09:00.324)
has taken, but in a short term spectrum, from a short term perspective, I see that the EU and the crypto asset service providers that are intending to get licensed in the EU will obviously suffer a bit because with companies like us that have USDT, for example, as one of the major flows that we are currently receiving or remitting, merchants...

or players of those mergers need to be educated that it won't be a sudden change like the European Union is expecting. So there might be some shortage, some reduction in terms of flows that we would normally expect with the natural growth of the business that might pause a bit. So that is what I think, that in the shorter term, I think we will suffer a bit.

But then in the longer term there will be more benefits that will be outweighing the repercussion at the moment.

Anaya McDonald (10:07.928)
Yeah, that seems a common theme when it comes to many financial regulations. It does take time to get those compliance processes in order for them to realise their full term benefits down the road. And we could be talking maybe one, two, three years in time. I think personally as well, from my perspective, I do think MECA would help the sector in itself grow.

to new heights because I think you'll start to see more players join the sector in Europe. But like you said, it's those short term problems or issues that companies will have to get over the line, I believe. But crypto as a whole is riding a wave of momentum at the moment. I know Donald Trump's been quite a keen supporter of it and that's obviously seen Bitcoin reaching all time new highs towards the end of last year.

And so Elton with this progression, how long before customers begin to not only invest in crypto, but then also see crypto currencies like Bitcoin or even stable coins like we mentioned as a form of payment for not just gambling, but in everyday life. And what are the boundaries stopping this payment adoption?

Elton Dimech (11:17.989)
I think seeing where the market is heading, I think we have now the right antidote to be able to really absorb this crypto adoption on a mainstream basis. Because when you start seeing like large payment companies like Visa, PayPal, exploring merchant settlements in stable coins, for example, or the insane amount of money that has flown into ETFs in...

in the US, for example, and in other jurisdictions, I think we have the right setup to start looking into making use of Crypto in the wider sense. So that's my hunch about this.

Anaya McDonald (12:03.748)
Yeah, I think it's definitely for the average person looking into crypto. They're obviously going to see the negatives, but they're also going to see the positives as well. I think it does take a lot of mainstream exceptions.

Elton Dimech (12:18.661)
And if I may add something, obviously there might be on the other side when there is an appreciation in the price, like Bitcoin reaching all-time highs. When it comes to a player, for example, maybe he would prefer keeping his Bitcoin in his wallet rather than betting with it because he's seeing that the price has gone up as well. So it may work also in the other way, where instead of making use of crypto for betting purposes,

Anaya McDonald (12:38.051)
Yeah.

Elton Dimech (12:46.797)
might use this for speculation or investment purposes.

Anaya McDonald (12:49.89)
Yeah, you see that lot, don't you? I that, I think that's also the problem. If crypto in itself, does it want to be an investment instrument or does it want to be a pure form of a payment method? So that's definitely something that consumers have kind of wrapping their heads around at the minute. But we've been talking about Mika in Europe, Elton. But there is also, like I mentioned with the US now, the US seems ripe for crypto regulation this year, obviously under Trump's administration. Are there any other

Elton Dimech (13:01.436)
I agree.

Anaya McDonald (13:19.236)
The markets that Payhound are looking at, know you're still going through the MECA process at the moment, but is there any other markets that Payhound are observing, like the US, that could implement some MECA-similar type regulations over this year and the coming years?

Elton Dimech (13:35.229)
Yeah, so from Payhoun's perspective, obviously we're always looking into other markets where our solution can work and be optimized for those specific regions or continents. However, I hope that the US does not take the same approach as Bicca, to be fair. I know that regulation will happen. Trump has been very forceful about this.

but he's also promising a lot of more transparency, trying to push business in the US way as much as possible. So I don't think that the US intention is to overregulate the market. I think the intention is to try and attract more and more business and therefore create the sort of arbitrage now on a more of a macro and economic basis where

Anaya McDonald (14:17.956)
Mm-hmm.

Elton Dimech (14:30.789)
It might be more interesting to look at markets like the US or maybe the Gulf area because obviously there's always the UAE side of the business where it might be becoming more attractive than Europe in general. Unless, obviously there might be some changes within the EU in the medium term from this regulation that makes it more attractive than it is right now.

Anaya McDonald (14:57.124)
Yeah, yeah, especially with the UAE, I I've done I've spoke to a couple of payment companies that are really looking at Dubai and Abu Dhabi as landing destinations to set up crypto hubs over there. They're kind of almost forming new crypto regulations and frameworks over there at the minute that's becoming a lot more attractive to the likes of Crypto.com and other companies like that. So and the gambling aspect as well to the UAE is obviously in the air. we've we've seen some

Elton Dimech (15:23.913)
Yeah.

Anaya McDonald (15:27.364)
welcoming reports in that regard when it pertains to the Abu Dhabi especially. So yeah, that's definitely a market to look out for in the coming years. But lastly Elton, thank you for coming on. Thank you for your time. We really appreciate it. With Mika still in its infancy, how important is it for crypto companies and crypto casinos to have best in class compliance teams just to make sure that they are compliant as possible in terms of new guidelines that may

be introduced in the coming years.

Elton Dimech (15:59.498)
Yeah, so it's of utmost importance having a proper compliance team that not only on the service provider side on our end, but if you're operating a regulated business as a casino operator, obviously you have to have certain knowledge in crypto as well, the way it operates, the risks that emanate from making use of crypto.

and how service providers like Payhunt can assist and fulfill that gap in order to make sure that you are in any way possible compliant in terms of AML obligations. So that is what I recommend to make use of crypto-asset service providers that are in line with AML and adhere to AML and CFT standards.

Anaya McDonald (16:48.322)
Yeah, great Elton. Thank you for your knowledge and your experience on MECA at the moment. And I'm sure you'll be learning a lot more about MECA as everybody else will be. So thank you for your time today. Really appreciate it. And for the listeners, if you would like to hear any more about MECA and some of its ongoing policies, then make sure to check out Payment Expert throughout the year as we will be covering all the developments around that.

Elton Dimech (17:01.292)
Thank you, Karam. Thank you.