FATF: Expect global cryptocurrency regulations
The FATF is preparing to get the entire world on the same page for crypto KYC.
The Financial Action Task Force (FATF), the global money laundering watchdog, announced last week that jurisdictions around the world will be required to start enforcing rules for cryptocurrency exchanges and other crypto-related services.
Clearer guidance, including clarity around the standards themselves and how they should be enforced, will be out by June 2019, says FATF president Marshall Billingslea.
The new rules include many that have already been independently implemented and enforced by many countries.
Broadly, the FATF says the new regulations will force jurisdictions to license or regulate cryptocurrency exchanges and some firms that provide encrypted wallets for the purpose of preventing money laundering, terrorism financing and similar.
It will also include further guidance for ICOs and for firms that provide financial services for ICOs.
Countries that consistently fail to enforce these rules in their jurisdictions risk ending up on the FATF's fiscally devastating naughty list, which currently includes North Korea and Iran.
The exact implementation of the rules will be subject to periodic reviews by the FATF to ensure they remain reasonable and practical.
The news was largely welcomed by a cryptocurrency industry that's been hungry for a move towards global regulatory clarity for a long time now. As a borderless technology, a system of unified global regulations naturally fits it best and will open the doors to further vital developments in the space.
For example, if you're trying to create a reliable programmable blockchain AML/KYC system for cryptocurrency, it helps to know what exactly it needs to do to be accepted around the world.
A welcomed move
Beyond the potential for quicker developments in a more unified global regulatory environment, the move was welcomed also as a way of cleaning up an industry in need of a scrubbing. Simply having some clearer global regulations could help clean up the crypto space by keeping bad actors further away, notes Cristian Gil, co-founder of the GSR programmatic cryptocurrency trading firm – one of the first market makers on Ripple's ledger back in 2013.
"Given its rapid global emergence and high retail participation, the digital asset arena has been a soft target for bad actors. Whether it be protection from money laundering or disorderly trading, we see a need for standardisation of regulations," he said. "We welcome the announcement by FATF and look forward to hearing more detail."
Going forwards, it's also a good step for bringing regulatory laggards up to speed and creating an environment of quicker and safer cryptocurrency adoption, Gil adds.
"It will help to coordinate existing regulation in mature economies and arguably have most impact in jurisdictions that have yet to establish policy. Steps like this are inevitable in the evolution of digital asset markets and pave the way for institutions and individuals alike to be able to enter with confidence."
Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VET, XLM, BTC and ADA.