The Financial Action Task Force (FATF), an intergovernmental body in the USA, has set out to make the whole world treat cryptocurrency exchanges like banks.
Bloomberg recently reported that new FATF regulations for businesses dealings with cryptocurrencies will officially be released later this month on 21st June.
Experts are already warning that anyone who exchanges more than $1,000 or €1,000 worth of crypto will have to provide personal information.
For businesses such as exchanges and asset managers, the Financial Action Task Force requirements stipulate the recipient of funds must also be identified which may be impossible with decentralized cryptocurrencies.
The FATF can only make ‘recommendations,’ and their application is a matter for each jurisdiction’s authorities. Those countries which do not comply can face blacklisting, however, and even removal from the global financial system.
Eric Turner, director of research at crypto research firm Messari said:
“The Financial Action Task Force recommendations could have a much larger impact than the SEC or any other regulator has had to date,”
Turner added the issue was “one of the biggest threats to crypto today.”
The Financial Action Task Force Approach To Exchanges
The FATF announced an incremental approach to cryptocurrency management in October last year.
Marshall Billingslea, the FATF president said:
“As part of a staged approach, the FATF will prepare updated guidance on a risk-based approach to regulating virtual asset service providers, including their supervision and monitoring; and guidance for operational and law enforcement authorities on identifying and investigating illicit activity involving virtual assets. By June, we will issue additional instructions on the standards and how we expect them to be enforced.”
Only two months later, all G20 members said they would implement the suggestions in full, a position it repeated earlier in June.
As the deadline approached, cryptocurrency figures have expressed concern at the inexperience shown by Financial Action Task Force officials attempting to apply legacy banking rules to Bitcoin and other cryptocurrencies.
Azteco CEO, Akin Fernandez, commented on Twitter in May:
“The people trying to understand Bitcoin are not consulting with anyone who actually understands it and who can put it into a proper context,”
In the tweet he showed an image of how a Bitcoin transaction contrasts with a bank transfer, saying:
“Bitcoin is not a bank. It is not SWIFT. It is not money. It is just a database. When you accept this, the above image looks totally absurd.”
Despite clearly not understanding Bitcoin and cryptocurrencies, the FATF will attempt to regulate money laundering in crypto. However, if the job governments are doing in relation to money laundering in fiat is anything to go by, then perhaps the cryptocurrency world does not have too much to worry about.
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