On January 1, 2025, Brazil’s regulated online betting market officially launched, marking a significant change for operators and players alike. While the introduction of new operators and licenses dominated the headlines, a crucial shift occurred under the radar: the prohibition of crypto payments in gambling transactions. Under Normative Ordinance No. 615/2024, Brazil made it illegal to gamble using cryptocurrency, directing operators to accept only electronic transfers. This decision represents Brazil’s efforts to transition from a loosely regulated market to a structured and controlled environment, following extensive regulatory discussions and aligning with the government’s broader strategy to formalize the betting sector, detailed in Brazil’s iGaming market research report.
The restriction on cryptocurrency use is a testament to Brazil’s commitment to re-establishing trust in its gambling system. Previously, cryptocurrencies allowed players to evade the traditional banking system, providing anonymity and ease of use. However, regulators viewed this as a significant concern. The government seeks a transparent market where every transaction is traceable, and every operator can be held accountable for their actions. Analysts like Dmitry Starostenkov highlight that while crypto transactions are technically traceable, they lack the direct oversight regulators deem necessary to cleanse the industry of its grey-market associations.
Yet, there is a debate within the industry regarding the potential consequences of this ban. Some experts argue that the prohibition might inadvertently push players back to offshore sites that continue to accept cryptocurrency. In this scenario, regulation could potentially alienate players instead of integrating them into the official system.
Cryptocurrency gained traction in Brazil during a time when regulatory frameworks were absent. Between 2018 and 2023, players often opted for offshore platforms that accepted digital currencies, leveraging crypto’s speed and privacy in a regulatory void. During this period, crypto casinos thrived, facilitated by peer-to-peer transactions that bypassed traditional payment channels. Despite the buzz surrounding crypto, its actual footprint was smaller than anticipated. Ed Birkin from H2 Gambling Capital notes that digital currency transactions constituted only 0.7% of all gambling activities in Brazil. This statistic presented regulators with an opportunity to phase out crypto without significantly disrupting the market.
However, eliminating cryptocurrency does not inherently provide an alternative solution. The pressing issue now is identifying what will fill the void left by crypto’s departure. With the focus now shifting from innovation to enforcement, Brazil’s Central Bank has initiated monitoring of cryptocurrency exchanges to detect questionable payments associated with unlawful betting. This builds on existing measures aimed at shutting down unauthorized activities, such as outlined in Brazil Regulator Targets Additional Illegal Gambling Sites With Cease-and-Desist Letters. Licensed operators now face stringent Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements to authenticate players and demonstrate compliance.
The overarching aim is to cultivate a legal market that players find more trustworthy than offshore alternatives. However, the success of this initiative relies heavily on whether local operators can replicate the sense of autonomy that initially attracted users to cryptocurrency. While Brazil’s approach may not set a global precedent, its policies will undoubtedly attract attention across Latin America. Similar debates surrounding technology-driven regulations are emerging in other markets, as reflected in discussions like All bets are off: How blockchain and Web3 are rewriting the rules of gambling in 2025. H2 Gambling Capital estimates the global cryptocurrency gambling market at about $3.5 billion, a small fraction of the total iGaming industry.
In Brazil, the objective is clear: to demonstrate that regulation can coexist with growth without stifling it. Operators adhering to these new regulations stand to gain from a more stable and credible market environment, while those who resist may find themselves marginalized. As Brazil’s regulators strive to construct a more equitable market, an essential question remains: Can the iGaming industry maintain its innovative spirit while relinquishing the freedom that once fueled its expansion?
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