June 21 FATF will publish the rules for the control of cryptocurrency and cryptocurrency services

The Financial Action Task Force on Money Laundering (FATF) is developing recommendations on combating money laundering and terrorist financing, of which there are 38 countries (including the United States and Russia).

June 21 FATF will publish the rules according to which the participating countries will have to monitor the activities in the field of digital assets . It is reported by Bloomberg, citing FATF spokesman Alexander Weimeng-Daniel.

The new rules will be applied to organizations working with tokens and cryptocurrencies – cryptocurrency exchanges and hedge funds, as well as providers of cryptocurrency services.

Much depends on how the rules (which have been regulating traditional bank transfers for a long time) will be interpreted and applied by regulators from different countries, but according to Messari director Eric Turner, today they are “one of the biggest threats to the cryptoindustry”.

“Their recommendations can have a much greater impact than the SEC or any other regulatory body ,” he said.

In its previous statements, FATF recommended that cryptocurrency companies collect information about customers initiating transactions worth more than $ 1000 or € 1000, information about the recipients of these funds, as well as send this data to the recipient service provider along with each transaction.

John Roth, director of cryptocurrency exchange Bittrex, said that although this process may seem simple, its implementation will be costly and technically difficult. In the end, cryptocurrency addresses are anonymous, so the cryptocurrency exchange can not always find out who is the recipient of funds.

“This will require either a complete and fundamental restructuring of the blockchain technology , or a global parallel system, which should somehow be created among about 200 cryptocurrency exchanges around the world ,” said Roth.

"Imagine how difficult it would be to create something like that."

According to Mary Beth Buchanan from Kraken, several US exchanges are discussing the possibility of creating such a system.

“This is an attempt to apply the rules of the 20th century to the technologies of the 21st century,” Buchanan said.

“There is no technological solution that would allow us to fully comply with these rules. We work with international exchanges to find a solution. ”

Buchanan added that the end result of this could be that many cryptocurrency companies will face high costs.

“I understand why FATF wants to do this ,” said Jeff Horowitz, Coinbase Compliance Director.

“But the application of banking rules in this industry can induce people to make transactions among themselves directly, which will lead to a decrease in transparency for law enforcement agencies. FATF needs to take into account the many unintended consequences of applying these rules to cryptocurrency services. ”

How soon these effects will begin to manifest themselves, will depend on individual countries, but if a country does not follow the FATF rules and appears on the black list, “it can be significantly restricted in accessing the global financial system,” said Jesse Spiro of analytical company Chainalysis.

After numerous meetings with representatives of cryptoindustry, regulators probably know that it will take time to comply with the new rules, as the industry develops new technologies and processes. Some see this as a positive side, since increased control can lead to a wider acceptance of cryptocurrency.

“Will it cause any difficulties? Of course, at least initially , ”Spiro said.

"But, it seems to me, this is what we need."

Publication date 12/06/2019
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