Neteller Bans Bitcoin Transactions

Neteller’s rejection of Bitcoin digital currency is a significant snub at a time when many sectors of the online gambling industry are intrigued by its potential. (Image: venturebeat.com)

Neteller, traditionally the Internet poker player’s preferred e-wallet, has banned the use of Bitcoin in all its customer transactions. The payment processing service revised its terms and conditions this week to state that the use of Neteller to “facilitate the trade, exchange, purchase or sale of Bitcoins, or any other virtual currency” would be prohibited.

The news may come as a blow to the growing new breed of online poker room beginning to accept the virtual cryptocurrency, which operates outside the central banking system and is traded via encrypted peer-to-peer networks. Just last week, Betcoin Poker, a Bitcoin-only online poker room, announced that it was allowing its players to enter tournaments on the Winning Poker Network.

Meanwhile, the leader in the Bitcoin poker market, SealsWithClubs, has somewhat rarely for an online poker site these days been reporting steady growth in its cash game traffic.

Stark Rejection

While the new policy is in line with that of a lot of mainstream payment processing firms, Neteller’s synergy with the online gambling industry represents a stark rejection for Bitcoin at a time when many players within the industry are curious about the potential of the currency. Even land-based Las Vegas casinos have been getting in the act. While the D Las Vegas Casino doesn’t accept Bitcoin for gambling (that’s one for the Gambling Control Board to mull over), it recently became the first casino in Sin City to accept the digital currency as payment for hotel rooms, meals at its restaurants, and even for goods in its gift shops.

Meanwhile, the Isle of Man, the online gambling jurisdiction where Neteller has its corporate offices, officially embraced Bitcoin recently, announcing its long-term ambition to create a “framework for regulation” and to “build an environment that would allow businesses to thrive in this rapidly emerging field.”

“The Isle of Man recognizes both the risks and opportunities presented by digital and virtual currencies,” said the Isle of Man Department of Economic Development. “Our stance is intended to welcome those who can meet the necessary standards while also preserving the Island’s good reputation as a financial centre… We anticipate that this market will develop and change rapidly and, as a result, we will keep market changes under review and with a view to consider future regulatory regimes as required.”

American Influence

Barrister and solicitor with General Counsel Isle of Man Paul Davis believes, however, that the island holds little influence over Neteller’s decisions when it comes to Bitcoin.

“Neteller is a global company, and its presence in the UK, Canada, Bulgaria and other places around the world is much greater than its physical operation on the Isle of Man,” he said. “Neither the Island nor its financial regulator would seek to impose an obligation on a licensee to service any particular vertical; rather the island’s stance is that it is open to quality digital currency businesses who are welcome on our shores.”

Neteller and Optimal Payments, its parent company, are far more likely to be influenced by a desire to reengage with the emerging American online gambling markets, and the US government has previously expressed its distrust of Bitcoin.

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