Cryptoworld Getting Ready for Major Regulatory Blow
As the Financial Action Task Force (FATF) is preparing to present a note on June 21, explaining to all the members of this inter-governmental effort how they should oversee virtual assets, the cryptoverse is embracing for the possible consequences.
As a reminder, FATF wants all business that are working with cryptocurrencies, including hedge funds, exchanges, custodian services, etc., would collect data about their customers starting transactions of over USD 1,000 or EUR 1,000 euros, as well as data about the recipients of the assets, and then send all the information to the recipient’s service provider with each transaction.
According to a report by Bloomberg, this is what the industry is expecting and how it is responding:
- A handful of international cryptocurrency exchanges are discussing how to set up such a system that would help follow the new rules.
- Compliance will be costly and technically difficult and an exchange has no way of knowing who the recipient of the funds is.
- There’s not a technological solution that would allow exchanges to fully comply.
- Some non-compliant businesses might lose money-transmitter licenses and could be shut down, while legitimate players still might get through successfully.
- Exchanges might lose customers as some of them may start trading with others directly, which would result in less transparency for law enforcement.
- If a country doesn’t comply with FATF rules and is placed on its blacklist, it can essentially lose access to the global financial system.
- Trading delays or additional transaction al costs as a result of compliance with FATF could impact returns at crypto funds.
- However, greater oversight could also lead to more institutional acceptance of crypto.
- The regulators most likely understand that coming up with new processes and technologies in order to comply with the rules will take time.
“Their [FATF] recommendation could have a much larger impact than the SEC or any other regulator has had to date”, Eric Turner, director of crypto market data provider Messari Inc., is quoted as saying in the report.
As FATF previously informed Cryptonews.com, these new recommendations are still going to be discussed at the forthcoming June 2019 Plenary Meeting the outcomes of which will be published on their website on Friday, June 21.
Also, a few days ago, finance ministers and central bank chiefs from the Group of 20 (G20) major economies showed support to the ‘draconian’ measures, suggested by the FATF.
The FATF is a multi-government body with 38 members and various observers, founded in 1989 by the Ministers of its Member jurisdictions, with a set of detailed measures for combating money laundering, terrorist financing, and the proliferation of weapons of mass destruction. The FATF recommendations are followed by two hundred countries.