Crypto-related businesses will be seeing a new note under a new guideline from the Financial Action Task Force (FATF) on June 21, which would clarify how participant nations should regulate the digital asset industry, the FATF spokeswoman, Alexandra Wijmenga-Daniel confirmed.
FATF is an intergovernmental body founded in 1989 on the initiative of the G20 to combat money laundering and terrorism financing.
As per reports from Bloomberg, the new guideline specifically center on businesses that work with tokens and cryptocurrencies, which intensively comprises of exchanges, custodians, and crypto hedge funds.
The upcoming rules demand that major crypto companies such as Coinbase, Kraken, and the asset manager Fidelity Investments, should collect data from both senders and receivers for transactions above $1,000 or 1,000 euros. However, a greater percentage of this depends on how country regulators will interpret the rules.
Based on the knowledge that wallet addresses on blockchains that support virtual currencies are usually anonymous, it is not that accurate for exchanges to determine the recipients of funds. Hence, to ensure full compliance of the exchanges, it is either the new system rolls in with a global parallel system constructed among exchange or a fundamental restructuring of the blockchain technology.
General Counsel at Kraken, Mary Beth Buchanan, argued that “without enhanced technology systems, this is a case of trying to apply 20th-century rules to 21st-century technology,” adding that, “there’s not a technological solution that would allow us to fully comply. We are working with international exchanges to try to come up with a solution.”
Considering the possible consequences that could be prompted by the new rules, Buchanan noted that many crypto businesses might face increased compliance costs, with the Chief Legal Officer, Phil Liu adding that non-compliant companies might even shut down.
The Chief Compliance Officer at Coinbase, Jeff Horowitz, also admitted that “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.”