The newly-established not-for-profit foundation run by two ex-PokerStars management members which has taken over the running of the CasinoCoin online gambling cryptocurrency project has rejected the possibility of an initial coin offering (ICO) for the disused coin.
John Caldwell, the new director of advocacy at the Isle of Man-based Double C Foundation which was formed earlier this year with the intention of promoting the potential for the use of cryptocurrency in the regulated online gambling space, said the organisation “thought long and hard” about a token raise.
“The lure of the ICO is very real,” he says. “Once you start taking people’s money, that gets attention and people start to ask questions that can become very tough very quickly.”
Caldwell adds that in the current climate of ICO fever the concept appears to him to be “overwhelmingly toxic”. “Many who have done ICOs are going to have knocks on the door in the near term,” he adds. “The ICO market won’t always be this way, but for the near term that is the reality.”
The approach taken by the Double C Foundation is, instead, to “add value through utility” in regulated gambling markets which Caldwell suggested would be the “best long-term approach.”
There have been a number of gambling-related token offerings in the past 12 months or more including high-profile fund raisings from Jez San’s FunFair.io and DaoCasino.
Meanwhile, esports-only betting operator Unikrn has completed the first stages of its Unikoin Gold token offering, raising $27m from its own shareholders and via and open market sale.
ICOs have been the subject of much regulatory attention. Both the Chinese and South Korean financial watchdogs have banned them while the UK Financial Conduct Authority (FCA) has issued a consumer warning and the US Securities and Exchange Commission (SEC) has also suggested some offerings potentially break securities laws.
Broader regulation of cryptocurrencies is being looked at by various jurisdictions including Malta which last week said it was looking at the possibility of a regulatory sandbox and the Isle of Man, which in August became the first jurisdiction to license a gambling operator to use virtual currencies when it licensed esports betting operator ESPbet.
“There are major limitations in terms of what the industry understands about cryptocurrency, which is understandable as this is all still very new,” said Caldwell.
“I’m increasingly encouraged with the pace of change I’m seeing. I’m particularly encouraged by the work the likes of the Isle of Man and Malta are doing in terms of building sensible frameworks for crypto gaming.”
He added that as such initiatives progress, it will “force operators to sit up and take notice, otherwise they will lose out to those who are capitalising on the new technologies and opportunities that cryptocurrencies present.”
To play its own part in the education effort, the Double C Foundation has formed an advisory board of various online gambling industry notables including Lee Fenton, chief executive at Gamesys, Britt Boeskov, CPO of Kindred Group and Sam Hobcraft, chief executive at OPL Gaming Group.
Caldwell himself was previously marketing executive at PokerStars and he is joined on the management team by Duncan Cameron, ex-senior project manager of research and development at PokerStars’ previous holding company Rational Group.
“It is critically important that we promote best-use practices of cryptocurrency in the gaming industry,” says Caldwell. “Many are sceptical of cryptocurrency or do not understand its merits. By bringing together many of gaming’s most trusted and respected executives, we have a strong base from which to begin to change that.”
He added that the foundation’s aim was to work as a governing entity which can promote best practice for CasinoCoin and cryptocurrencies generally. “Many cryptos have Foundations (Bitcoin, Ethereum) as the decentralized nature of cryptos necessitates a governing entity,” he says. “I see the Foundation’s main roles being two-fold: on one side, there is an educational and advocacy role. On the other side, it’s necessary to keep the technology of the coin on the leading edge.”
Caldwell said that the first challenge for the foundation was one of education. “The gaming industry does not yet have a good understanding of what cryptocurrencies such as CasinoCoin can offer,” he said.
“There is a lot of distrust, and many do not see how an altcoin like CasinoCoin can fit within a regulated gaming offer. Until we break down these barriers and show that cryptocurrency is the perfect medium for responsible gambling within regulated markets, there won’t be progress.”
Caldwell said the next step was establishing a proof of concept which he suggested would likely take the form of a small, geo-fenced trial with an operator in a jurisdiction where we have regulatory approval.