Compliance with the new FATF rules – Summary of February 2020

Respectarea noilor reguli FATF 

February started with high hopes for the crypto market – Bitcoin rose from $ 9300 to about $ 10,500 by mid-month. Unfortunately, the coronavirus outbreak that broke out this month had a negative effect on the price.

Although it initially appeared that investors would choose to protect their assets through investing in cryptocurrencies, it was later proven that the negative effects of the epidemic also spread to the crypto market.

SEC does not help industry

The fact that the SEC rejected the tenth Bitcoin ETF proposal, submitted by Wilshire Phoenix, certainly didn’t help. The decision was justified by concerns about market manipulation and lack of supervisory sharing agreements. SEC Commissioner Hester Peirce, known as “Crypto Mom”, publicly declared his disagreement over the decision.

However, Bitcoin has dropped to $ 8,500, and bulls are struggling to maintain this level of resistance.

Overall, the BTC ended February with a decrease of about 7%, for the first time in 2015. The decrease in prices invalidated the argument that it is a safety asset in case of negative economic movements.

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In any case, the evolution of the cryptocurrency was better than that of the Dow Jones index. It has the weakest evolution since the financial crisis of 2008.

CBDC – Digital currency issued by the central bank

One of the main topics of discussion for February was CBDC – the digital currencies issued by central banks. Several representatives of these financial institutions stressed the need to study them. For example, the head of the Bank of England, Sarah John, said it was “crucial” for central banks to investigate digital currencies. In his opinion, this is especially important from the perspective of the initiatives of launching these coins by private companies.

The Bank of England is one of seven financial institutions that co-founded a new working group on CBDC this year. In January, several central banks decided to collaborate in the field of research on digital currencies issued by central banks.

These include Riksbank from Sweden, which has already announced a pilot project for an e-krona. It will be in operation for one year, until February 2021.

Also, the Bank of Japan held several meetings with several ministries to discuss the economic effects of digital currencies. Japanese politicians have expressed concern about the possibility that digital currencies, such as those developed by China, will affect the dollar-based economic order. Currently, the bank of Japan has no plans to launch a digital currency, but is studying the technology.

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The National Bank of Cambodia (NBC), on the other hand, is preparing to launch a CBDC. Known as the “Bakong Project”, it was developed by Japanese blockchain company Soramitsu.

Chea Serey, NBC’s CEO, told Phnom Penh Post that the central bank has developed “a national payment system for Cambodia.” This is a blockchain platform, peer-to-peer, with a specially designed cryptocurrency. Serey did not offer a concrete deadline for CBDC launch.

Compliance with the new FATF rules

At the same time, G20 members issued a joint statement urging member countries to implement and comply with the new FATF rules on cryptocurrencies. The G20 group of countries has assumed the implementation of the new FATF rules in July 2019.

Since then, several countries have imposed new regulations on the crypto market. For example, Singapore and South Korea have adopted extensive VASP legislation. This is based on the new legal framework for anti-money laundering. The European Union also adopted the fifth anti-money laundering directive (AMLD5) this year. AMLD5 requires crypto exchanges to register with local regulatory authorities and comply with the new FATF rules.

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FATF rules and recommendations allow authorities to make interpretations in accordance with local law. Although not mandatory, countries that do not adopt FATF recommendations may be restricted in terms of world trade and investment.

Regulations of crypto companies in Germany

The supervisory authority of the German market BaFin also clarified the regulations for foreign crypto companies operating in Germany. The regulations that came into force on January 1, 2020 provide that foreign companies must also announce their intention to apply for a license by March 31. They have until November 30 to get it.

More than 40 banks have announced the Federal Financial Supervisory Authority of Germany (BaFin) that they are interested in providing crypto custody services.


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