“A Casino in Your Pocket”: Is Crypto Trading Just Gambling?

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A castle in Scotland. A villa in Majorca. A chalet in Switzerland. Take advantage of the crypto markets a little too much, and these are some of the new luxury crypto rehab centers where you could land.

If you can still afford it.

Abdullah Boulad, who runs a collection of luxury crypto detox centers in Majorca, Switzerland and London for “addicts”, is among a growing number of medical professionals, lawyers and experts in politicians who say crypto trading is more akin to gambling than it is to other financial instruments.

Some rehab centers have started treating crypto trading as a gambling addiction.

Romantic Studio – stock.adobe.co

It is the immediate gain and constant availability of markets that distinguishes it from trading in, say, securities. At the end of the day and over the weekend, the trading floors close and retail investors cannot spend all day and all night feeding the rush for money made or lost.

“Crypto is something you have 24/7,” Boulad said. “You don’t put it away. It’s like playing the casino in your pocket”

Boulad said the way to treat a crypto addiction is not far from that of a gambling addiction. Crypto trading can tap into the same reward and adrenaline centers in the brain, he said. he stated, so the treatment options are similar.

“It’s also very fast. You can lose a lot and you can win a lot,” he said. “You can make real change in your life and make or lose a lot of money.”

Mental health professionals aren’t the only ones seeing the similarities between crypto trading and gambling.

Todd Baker, senior fellow at Columbia University’s Richman Center for Business, Law & Public Policy and managing director of Broadmoor Consulting, argued that crypto trading should not be legitimized by traditional financial institutions or by financial regulation. . Instead, he said crypto is a closed loop, where investing in certain coins doesn’t actually fund, say, a company that, in turn, creates products, services, or productivity.

“Is crypto trading financial?” he said. “Unless it’s about turning money into a useful investment, they’re not really financial services.”

And just like banks don’t hold casino chips, Baker said traditional financial institutions should be entirely separate from holding, funding or trading cryptocurrency.

“The critical part would be keeping real money out of the system,” he said. “From that perspective, I wouldn’t want banks to provide leverage, and I wouldn’t want stock markets to turn these things into more traditional financial vehicles.”

Although regulators and lawmakers are unlikely to suddenly abandon the idea that crypto should be regulated by financial agencies, Baker said the idea that crypto trading and gambling are surprisingly similar has much success in Washington, if only in private conversations. This carries over to the idea that regulators, such as the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp., should insulate the banking system from the volatility of crypto markets.

Regulating crypto as if it were gambling, rather than a financial instrument, would trigger a wave of impactful change, said Will Bunting, assistant professor at Stetson Law, whose article “A Better Legal Definition of Gambling: With Applications to Synthetic Financial Instruments and Cryptocurrency” is forthcoming in the Albany Law Review.

In an extreme case, local jurisdictions could limit crypto trading, much like Utah and Hawaii still prohibit gambling facilities. More realistically, regulators could restrict access, impose time limits on which people were allowed to trade cryptos or restricted to certain physical locations, like a casino.

“In the game, you can block certain people from participating and you can restrict access,” Bunting said. “For example, should people be able to access a slot machine when they’re drunk at 2 a.m.? In some cases, you even have to go to a physical casino, which is an additional check.”

And regulators could more easily govern how and when people trade crypto on credit. Some casinos, for example, don’t allow players to gamble with their credit card, and some rules require players to be given the option to refund what they’ve wagered. Crypto trading could adopt similar restrictions.

“Bookmakers tend to balance both sides, which is another form of risk mitigation,” Bunting said. “If I’m just allowed to promise I’m good at it, then you walk into Tony Soprano breaking his knees.”

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