Argentina focus: Regulatory parallels and challenges in gambling and crypto
Gambling and crypto lawyer, Agustín Diaz Funes, spoke to Gaming America about the increased participation in betting and the role of online platforms during the pandemic, as well as the regulatory challenges of advertising, cryptocurrency and provincial oversight.
How do you see the relationship of Argentinians with gambling, especially in recent years?
Interest has clearly grown. You can see this from the fact that on the jerseys of the biggest clubs, the main sponsor is a betting house, and the tournament itself also carries a betting house as its main sponsor. This can only lead you to think interest has grown and that there’s really an appetite for this product for the average Argentinian.
I think gambling was always there: it’s an industry that’s always present. What changes is technology and how people access this product. The internet and the Covid-19 pandemic especially accelerated processes that perhaps weren’t contemplated to be so present in people’s lives. What was thought to be maybe 10 years of growth into just two years, and this clearly impacted gambling, where online gambling suddenly became accessible at a time when people couldn’t go to physical venues.
Something that happened by chance was the main jurisdictions started regulating online gambling just the year before or months before the pandemic. So regulation appeared at a time when the industry could have had the greatest growth, and today it’s already part of individuals’ lives.
In terms of advertising regulation, what challenges exist today?
This is the most sensitive point because it’s an industry that needs advertising, and in Argentina there are added difficulties since gambling is regulated at the provincial level. This creates situations where a regulated operator cannot offer its products in jurisdictions where it’s not authorized to operate. This generates a situation where illegal operators offering unregulated products can use the internet to target the entire country directly, giving them a competitive advantage over regulated operators who must comply with current regulations and responsible gambling provisions.
An operator that doesn’t have to comply with those regulations has a competitive advantage. You find yourself in a situation where advertising gets mixed up, especially in new publication channels like streaming, where someone might be advertising an unregulated betting house. The person advertising may not have done proper due diligence regarding who hired them. This creates a mix where it appears in the public sphere that betting houses are encouraging gambling among minors, especially when influencers appeal to younger audiences who see betting codes and bonuses advertised without proper age verification measures.
How does cryptocurrency fit into this landscape, particularly regarding payment methods and regulation?
Payment methods, whether through fiat currencies, often find their way abroad through crypto, which is just another payment method with the benefit of being international. It allows you to repatriate funds without necessarily going through a regulator’s instance. Today, fortunately, Argentina has regularized its situation. What was previously a gray area in crypto regulations is now behind us and included in national money laundering regulations. Virtual Asset Service Providers (PSABs), companies or people who offer services like exchange between fiat and virtual assets, transfers, deposits, and custody, are now given a framework and included as obligated subjects.
These individuals now have obligations to carry out anti-money laundering policies and know-your-customer procedures. The analysis is no longer just knowing clients, but understanding what’s behind transactions, especially understanding that crypto can be used to move funds of criminal origin.
Crypto has facilities that make it attractive for moving funds: it can be converted to the global reserve currency (dollar) through USDT or other stablecoins, it has internationality, instantaneity and irreversibility. All the benefits we celebrate in this technology can also have negative uses – being able to send funds anywhere in the world instantly can be useful, but can also be used for non-legal purposes.
How has the regulatory framework evolved for both industries?
In March last year, Argentina received FATF for its fourth inspection round, and one of the sensitive points was the lack of regulation, including virtual assets. After the 2022 bill, criminal code reform came out, including virtual service providers within money laundering regulations. The UIF (Financial Information Unit) issued regulations detailing requirements for these obligated subjects. Many companies were already materially complying, so it wasn’t a surprise. The law established that the CNV would be the control authority for these subjects.
The CNV created a registry alongside the UIF for these subjects to register, providing a way to follow up on companies offering legitimate services in the country. This registry was in force throughout 2024, and in March this year, new CNV regulation came out with a much more robust approach to PSAB requirements.
Now we have a registry of companies authorized to offer their services in Argentina. There’s a national regulator of the activity itself, and they’re part of subjects regulated by another national authority, the UIF.
What’s the current relationship between gambling and crypto in practice?
Today, the link between gambling and crypto is strictly in the illegal plane. Current gambling regulations rely much more on the traditional financial system, requiring betting houses to have funds in entities regulated by the Central Bank, often provincial banks. Crypto doesn’t find much place in the legal gambling framework currently. However, thinking strictly of crypto as a channel for illegal gambling to access funds is no longer as straightforward. While companies that circumvent regulations will always exist, those PSABs that are compliant and fulfilling requirements are registered and performing necessary tasks for regulatory compliance.
People are starting to understand better how this works. It’s no longer the same to send funds to a PSAB from an unknown location that might close overnight and lose the funds. Argentina has high crypto adoption partly because it became difficult to trust our currency and access reserves to preserve value, so the alternative was always dollar/crypto.
2022 was a year of many blows in the crypto industry, and many Argentinians learned that not everything is the same: not all virtual assets are equal, not all companies offering these services are equal. People now have a more cautious approach, entering somewhat distrustful of crypto due to these experiences.
What regulatory solutions could address the intersection of both industries?
Today, there are already tools and legislation in each jurisdiction. Perhaps what could serve as a deterrent tool would be expanding the criminal types in the Penal Code. Currently, illegal gambling only reaches whoever offers it: the betting house. In this new context, it might be necessary to include whoever promotes illegal gambling, because just targeting the offering falls short.
This is a norm designed for an analog world. When a betting house has its address in Taiwan or an IP in a difficult-to-access jurisdiction, that betting house needs communication tools like influencers to penetrate the market. A possible deterrent would be expanding the criminal type to indicate that whoever communicates or serves advertising purposes for illegal gambling also faces penalties. The Central Bank is working with payment methods and PSPs because the gambling industry is interconnected with different industries. If you work with different components – if you can’t access the betting house, you try to cut off the different tools it uses.
Working with payment methods involves having them perform due diligence on clients, justifying movements, and seeing if they can originate from someone receiving funds to channel them to fund accounts abroad. For crypto specifically, the new regulatory framework allows regulators to carry out surveillance and have resources to do it. The technical level at the CNV has advanced significantly – they recently issued advanced regulation on tokenization. The relationship between gambling and crypto regulation is evolving, but currently, legitimate crypto operations are becoming more distinguished from their use in illegal gambling schemes.
Is more regulation the answer?
Maybe not more regulation, but better regulation. Today, regulation isn’t lacking: each province has quite robust frameworks. The norms exist. Perhaps we should review how people interact with this technology, do more nuanced work, and understand why these situations occur.
We should consider broader issues about how people relate to technology: spending 12 hours looking at phones, consuming screen content. Perhaps we should go further back and think if there isn’t a bigger problem than just gambling – that gambling is just one face of something larger, involving new habits and new technologies. The technological evolution happening in recent times is enormous. Artificial intelligence creates bizarre usage situations that regulation doesn’t finish accommodating. By its nature, regulation always arrives behind people’s actions. No matter how much one seeks to prevent, norms accommodate to situations that are happening and then provide windows for operators to regularize their situations.
Both gambling and crypto represent this challenge where technology moves faster than regulatory frameworks, creating gray areas that can be exploited while legitimate operators work within evolving compliance requirements.
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