Why Banks Are Still Nervous About Crypto, Gambling and Why That Might Change Soon

Despite the booming growth of sports betting and the increasing adoption of cryptocurrencies, most traditional banks continue to tread carefully—if not outright avoid—facilitating transactions that link the two, writes Davidson Abraham 

At the core of banks’ hesitation are anti-money laundering (AML) and know-your-customer (KYC) obligations. Cryptocurrency transactions, particularly those involving decentralised or pseudonymous wallets, can be challenging to trace. The reasons are rooted in risk management, regulatory compliance, and concerns about reputation.

This lack of visibility exposes banks to potential risks of money laundering, fraud, and terrorist financing. Even when users pass KYC checks on betting platforms or fintech apps, banks are still liable for ensuring that the source and destination of funds are legitimate.

Another major concern is regulatory uncertainty. In countries like the United States, various agencies—such as the SEC, FinCEN, and OCC—have yet to release unified guidelines on how cryptocurrency betting should be handled. Without a clear regulatory framework, banks fear becoming entangled in investigations or facing sanctions for processing transactions that could be deemed high-risk. Many banks have, therefore, opted to block or flag gambling-related crypto payments, especially when tied to known betting platforms or wallets.

However, pressure is mounting for this cautious stance to evolve. Fintech disruptors like MoonPay, BitPay, and Crypto.com Pay are stepping in to handle crypto payments for sportsbooks, ensuring real-time AML/KYC compliance and offering seamless fiat conversions. Their ability to mitigate risk—while still delivering speed and innovation—has made them attractive partners for both users and betting platforms.

Furthermore, consumer demand is growing. In regulated U.S. states like Colorado and New Jersey, users are increasingly expecting fast and flexible deposit options, including those involving cryptocurrency. Fintechs are capitalizing on this shift, and banks risk being left behind if they don’t adapt.

Additionally, new blockchain analytics tools—such as Chainalysis or Elliptic—are making it easier to track cryptocurrency transactions and assess wallet risk levels. As these tools improve, banks may gain the confidence to re-enter the crypto betting space cautiously.

In summary, while banks remain risk-averse today, technology, regulatory clarity, and market competition may soon force a change. What was once seen as a threat could become a well-regulated opportunity—if approached with the right compliance tools.