A clerk for the Financial Action Taskforce (FATF) has assured cryptocurrency platforms that the new guidelines are not “monsters”. This is perhaps in an attempt to ward off fears that these regulations will bring the industry to its knees.
Tom Neylan, speaking at the V20 summit in Osaka Japan, essentially outlined the FATF guidelines. Accordingly, the conference will seek to enlighten the world’s virtual currency exchange contractors (VASPs), major blockchain related companies on these measures. The consultation of the industry regulatory bodies on the “Cryptographic Asset Supervision Guidance” is certainly important.
The FATF Measures
The FATF has proposed measures that will require “virtual asset service providers” (VASPs), like coin exchanges to circulate customer information between each other as they conduct transactions.
This disclosure will empower the exchanges to effectively track and report suspicious activity. After all, the FATF measures have an overall goal of cracking down on money laundering and terrorist financing. This is certainly a concern for countries which have issues with large volumes of crypto movement.
In fact, the FATF considers misuse of crypto for illegal ends as an ‘urgent and serious’ issue. This is why members of the body and G20 countries will enforce the new guidelines. The licensing requirements for exchange businesses will try to streamline the sector. Notably, those who use crypto to buy and sell goods and services or make on-off transfers will be exempt.
Adoption of the Measures
The FATF is keen to clarify that these guidelines will not be stifling for the crypto sector. At the moment, the agency is still searching for the appropriate kind of regulatory framework. It goes without saying that there will be problem in establishing inclusive legal bases not just for centralized exchanges. DEX and P2P exchanges also need to be part of this landscape.
A central bone of contention is certainly the policy that requires the sharing of accurate personal information among the virtual currency exchange companies. This is to cover both the “sender or receiver” exchanges as the guidelines stipulate.
Accordingly, Neylan admits that there will be comprehensive technical issues especially for P2P transactions like OTC. This category of service providers need an entirely different framework approach to regulate.
The guidelines don’t cover every country that has the possibility of an increase in remittance use without involving exchanges. This is something that the task force will continue to monitor to ascertain the full impact in due course.
In general, Neylan and the FATF stressed the need for regulation. This, to them, is a positive need in the coin sector. Speaking, he said:
“Regulation on the virtual currency industry is not a fear-causing monster, and if it is implemented, the virtual currency market will be more open.”
The nature of the crypto industry since inception has always been devoid of centralized regulation. As such, many in the sector will always look at regulations as a threat to the identity and uniqueness of crypto. This is why the regulator is keen to make it clear that the regulations are not there to suffocate the sector. Instead, the goal of the FATF is to bring criminal elements within crypto in check.
Moreover, there are blockchain platforms that want to go mainstream and call for such positive regulation. The balance between regulation and nurturing innovation will continue to be a tight rope walk into the distant future.