FATF With Regulations Proposal, Are Cryptocurrencies Threatened?
Тhe Financial Action Task Force (FATF) which is a collaborative pack consisted of more than 200 nations, including the United States, was created to battle money-laundering and financial frauds. The association will distribute a document, explaining how all of the FATF members can regulate digital assets, Alexandra Wijmenga-Daniel, FATF representative said in an email.
The new standards will apply to organizations working with tokens, coins and cryptocurrencies in general, such as exchanges and hedge funds.
Eric Turner, Director of Research at Messari Inc. stated that cryptocurrencies are facing one of their “biggest threats, because FATF recommendations may lead to a harder hit than SEC’s statements.” The problem, according to Turner, is how the regulatory framework would be applied on a country-specific level.
The new rules will require organizations to gather data about users completing transactions of over $1,000 or €1,000. This comes in force for two of the largest crypto exchanges, Coinbace Inc, and Kraken, as well digital asset management companies like Fidelity Investments. Exchanges would also have to collect detailed information about transaction receivers and send the data to the recipient’s financial service provider.
The Chief compliance and ethics officer at U.S.-based crypto exchange Bittrex — John Roth, stated that although the data gathering may look simple, it’s technically almost impossible to identify who sits behind any given cryptocurrency wallet.
“You have two options — to rewrite the way blockchain works as a technology, or to create another, parallel blockchain serving those exchanges,” Roth said. “There is no way not to have trouble either way.”, Roth added.
Crypto exchanges are already on the lookout for practical solutions to battle the upcoming crypto crisis.
“You can’t develop 20th-century regulatory frameworks to 21st-century technology. It would simply not work!” Mary Beth Buchanan, general counsel at Kraken, stated.
Coinbase’s CCO Jeff Horowitz also put his opinion regarding the new regulations:
“Users want their privacy. If the FATF wants to bring bank regulations into the crypto world, the outcome would be to push people to perform person-to-person exchanges, instead of complying to the regulations. The person-to-person method reduces transparency and enhances the chances of fraud and money-laundering.”
Will crypto regulations push away crypto enthusiasts in trading digital assets in a regulated market? For now, there is no specific deadline about when the regulations will be ready. But parties like the Financial Crimes Enforcement Network (FinCEN) and the Financial Industry Regulatory Authority (FINRA) are already raising pressure on crypto exchanges.