FATF Unveils Updated Guide to Cryptocurrencies
The Financial Action Task Force on Money Laundering (FATF) has released the final guide to digital currencies tailored to the specifics of the Decentralized Finance (DeFi) and Non-Fungible Token (NFT) industries.
The FATF published its first guide to cryptocurrencies as an asset class back in 2019. At that time, all cryptocurrency exchanges and money transfer systems using cryptocurrencies were classified as “virtual asset service providers” (VASP), calling for compliance with the standards applied to participants in the traditional financial market. One of the main requirements for VASP is the collection and transmission of information about the sender and recipient of transactions.
Such actions on the part of FAFT caused a violent reaction not only in the cryptocurrency community, built on the principle of anonymous transfers but also among the representatives of cryptocurrency companies themselves. They were worried that due to such rules, their business would have many problems and misunderstandings with regulators in different countries. Binance, for example, has been regularly attacked by various financial institutions over the past year.
The FATF claims that it has carefully worked through the controversial aspects of the leadership since then and is ready to present a more “measured” approach to crypto assets by issuing updated rules. At a meeting in July this year, the department decided to postpone the publication of innovations until October, spending additional time to add more detailed explanations. Representatives of the organization promised to analyze crypto services in isolation from traditional finance, not trying to forcefully adjust them to the already existing FATF nomenclature.
NFT and VA
The main question with regard to NFTs was whether they represent a virtual asset or not. According to the FATF, non-fungible tokens themselves are not virtual assets. However, if they are started to be used in such a way that they fall under the FATF standards, their regulation should also change. Therefore, the agency strongly advises country regulators to consider each case in the NFT industry separately.
The booming field of decentralized finance has proved to be a real challenge in terms of the development of a set of rules by the FATF. The FATF guidelines note that some projects in the field of decentralized finance are in fact under the control of a single person. If so, they should be subject to standard anti-money laundering rules. At the same time, representatives of the FATF emphasized that individual holders of governance tokens are not subject to regulatory requirements if they do not have a significant impact on a particular DeFi market.
Previously, the FATF called efforts to regulate the cryptocurrency industry "insufficient" and, apparently, the new leadership will soon correct this. But whether the community members agree with this opinion is a big question.
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