The FATF Group is working to complete the Digital Goods Guide

grupul FATF

During this period a meeting of the G20 members and the Financial Action Taskforce (FATF) takes place to establish the regulatory standards applicable to the cripto industry.

In June, the FATF group drafted a regulatory project for cryptomonas and the companies that manage them. The G20 members issued an official statement stating:

“Technological innovations, including those underlying Cryptormons, can bring significant benefits to the wider financial system and economy. Encrypted assets are not a threat to global financial stability at this time, but we remain vigilant at risk, including those related to consumer and investor protection, money laundering and counter terrorism financing (CFT). “

Currently, the FATF Group is working to complete the Virtual and Digital Goods Guide.

A problematic project for the industry

Members of the crypto community have pointed out that, in the current form, the project will cause major difficulties for the cryptomonas industry. The FATF project provides:

“Governments should ensure that Virtual Service Providers (VASPs) obtain and hold necessary and accurate information on the origin of the funds and the information requested by the beneficiaries about the transfers of virtual assets. They must send the above information to the beneficiaries of the VASP and (if any) and make them available to the competent authorities at their request “

Chainalysis explained why this provision is almost impossible to implement:

“This would force VASP to verify not only the identity of the customers but also to identify the recipients of the transfers in order to transfer that information. This rule would apply to all transactions above the USD 1,000 / EUR threshold. The FATF guidelines in their present form would have profound implications for the crypto industry. “

Chainalysis has highlighted that there are major bottlenecks in implementation

“There are clear technical barriers that prevent cripto companies from complying with these standards. In most cases, crypto exchanges can not identify whether a beneficiary is a different platform or wallet account. In addition, there is currently no infrastructure to allow the transmission of information between crypto companies. “

Negative consequences

John Roth, the security officer at Bittrex, pointed out that wallet addresses are largely anonymous. The exchanges are currently not able to identify the beneficiaries of the funds:

“There will be a complete and fundamental restructuring of blockchain technology, or a global parallel collaboration system between about 200 cryptos exchanges in the world will be needed … You can imagine how difficult it would be to build something like this”

Jeff Horowitz, head of Coinbase’s compliance department, shares the same point and points out the negative consequences of a few rules:

“The FATF should take into account the many unintended consequences of applying this specific rule to the VASP. Applying banking regulations in this industry could cause more people to carry out individual transactions, which would lead to less transparency in law enforcement. “

One of the consequences of such regulation would be the proliferation of decentralized and peer-to-peer exchanges that are not subject to KYC / AML regulations. This will significantly reduce the transparency of the transactions that the authorities want.

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