STABLECOIN IS HERE TO STAY

Bringing stablecoins as an alternative payment method in the gaming industry

With governments strengthening the AML (anti-money laundering) regulations and the increased efforts to reduce the gaming-related harm, companies operating in the gaming industry are facing the next big challenge.

The regulations are also supported by the VISA and Mastercard card schemes, resulting in millions of denied transactions. In addition, customer identification and age verification are becoming a prerequisite for opening an account at a gaming institution. Thus, the customers’ privacy and payment methods are being reduced.

All the above encourage the heavily regulated gaming sector to start looking for alternative ways to keep its customers. One of the most innovative and attractive solutions relies on the new blockchain technology and provides gamblers with the option to pay with cryptocurrencies and stablecoins.

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Emerging trends in the gaming industry

According to a report by the Business Research Company, the global gaming industry will grow at a compound annual growth rate (CAGR) of 10.8% for the period 2020 - 2021. It is forecasted that the market will grow from $465.76 billion in 2020 to $516.03 billion in 2021.
The expected growth of the gaming industry is mainly due to its recovery from the COVID-19 pandemic and the changes made in business operations. Another cause of the growth is considered to be the implementation of new technologies such as blockchain and virtual reality.
Looking further ahead, the forecast suggests that the global gaming market will grow at a CAGR of 7% reaching $674.7 billion in 2025.
Dolar sign 465.76 billion
Global gaming market size in 2020
10.8 %
CAGR for the period 2020-2021
Dolar sign 516.03 billion
Global gaming market size in 2021

What is stablecoin?

Stablecoin is a new class of cryptocurrencies that offers stability and has a reserve asset. They are designed to be pegged to fiat money, precious metals or other cryptocurrencies. That new currency offers the perfect mix of both worlds – stable fiat currencies and cryptocurrencies.

The idea behind stablecoin is to create a bridge between fiat and cryptocurrencies.

Stablecoin logo

Stablecoins types

Fiat-Collateralized Stablecoins

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Crypto-Collateralized Stablecoins

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Non-Collateralized (algorithmic) Stablecoin

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Examples

Real-world applications of stablecoins

Stablecoins can be used just like any other currency for mainstream commerce, but to benefit like a digital one and, on the other hand, be secured as a fiat currency.Stablecoins give you the freedom to pay for your morning coffee using cryptocurrency.

Also, stablecoins make overseas payment cheaper as they don’t need any conversion like the normal fiat currencies. A person in India could receive USD-backed stablecoins without converting them into rupees and losing a massive percentage to fees.


Stablecoins will also improve cryptocurrency exchanges, as at the moment very few cryptocurrency exchanges support fiat currencies due to strict regulations. But the use of stablecoins skip this step and offer crypto-fiat trading pairs by simply using a USD-backed stablecoin instead of actual dollars.

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Stablecoin will give more freedom to high-risk industries like gaming, as with them, payment schemes are not on the table.

Viliana Petrova

Marketing Manager

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Limitations (advantages / disadvantages)

Stablecoins have many advantages but also some limitation.

Lack of trust is the biggest problem. As fiat-backed stablecoins are centralized, meaning they are run by a single entity. This requires trust to be put into this entity that is backing up their stablecoins with real fiat. And here comes the need for regular third-party audits to ensure transparency and a spotless reputation.

Another problem with stablecoins is they have less liquidity than regular cryptocurrencies. For example, if an owner of crypto-collateralized stablecoins wants to get the gold behind it, it may take months to do so.

Finally, stablecoins may face potential limitations from local governments. For instance, in a country with high inflation rates, the government may protect their local currencies by blocking stablecoins pegged to foreign currencies.

OUR SOLUTION

Conclusion

Conclusion

The gaming industry remains one of the most heavily regulated industries, and there is a reason behind that. With the help of new technologies, companies operating in this sector can achieve transparency and meet local and international regulatory requirements.

Such technologies include KYC, KYB and PEP and Sanction solutions as well as innovative payment methods. Innovation is what drives the world today, and SEPA Cyber Technologies is the leading force behind it.

We have created a strong and secure fintech marketplace, MuSe, that gives our clients access to more than 600 third-party and internally developed innovative fintech solutions suitable for companies operating in different industries.

The scalability and flexibility of our products allow our clients to achieve agility and successful digital transformation of their business operations. This further helps with the improvement of customer experience and meeting customer expectations.

SEPA Cyber’s fintech solutions and team of experts can help companies operating in the gaming industry with technological advancement for developing competitive advantages and elimination of security risks in connection with online frauds, financial crimes and money laundering.

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