Global Financial Regulator FATF to Introduce Crypto Regulation Next Week on June 21

According to the latest Bloomberg report, global financial regulator - the Financial Action Task Force (FATF) - will soon publish a note next week on June 21, clarifying some guidelines for virtual digital currencies, to its member nations.

In an email, the FATF spokeswoman Alexandra Wijmenga-Daniel wrote that the new rules should be applied to all the businesses associated with cryptocurrencies like exchanges, custodians, as well as crypto hedge funds.

The FATF is a global financial regulatory body governing that looks after combating illicit activities of terror-financing and money-laundering.

So far, different nations have been separately approaching cryptocurrency regulations with their national regulatory bodies. The involvement of a global body like the FATF is likely to have a greater impact in dealing with crypto regulations which have been prolonged for quite some time.

Moreover, the guidelines will be applicable to crypto exchanges in addition to financial giants like Fidelity Investments who have been working on launching their crypto products in the market. These institutions are required to collect all the necessary information of customers initiating transactions above $1000 USD or 1000 Euros.

However, one major hurdle is that the wallet addresses on digital ledgers supporting different cryptocurrencies are largely anonymous. Hence it will be almost impossible for the exchange to determine who the recipient of the fund is.

The chief-compliance officer of Bittrex exchange, John Roth said: “It’s either going to require a complete and fundamental restructuring of blockchain technology, or it’s going to require a global parallel system to be sort of constructed among the 200 or so exchanges in the world. You can imagine difficulties in trying to build something like that.”

Well, cryptocurrencies were basically in place with the very understanding that it will have any little interference on centralized institutions. Some exchange believe that they might lose more customers who would ultimately want to safeguard their privacy.

Coinbase’s chief compliance officer Jeff Horowitz said: “I get why the FATF wants to do this. But applying bank regulations to this industry could drive more people to conduct person-to-person transactions, which would result in less transparency for law enforcement. The FATF really needs to consider the many unintended consequences of applying this specific rule to VASPs.”

Global regulatory bodies are stressing to having unified and clear regulations all over while dealing with digital currencies. The Financial Stability Board (FSB) recently asked local regulators to step-up measures for risk assessment strategies in the crypto space.