The Financial Action Task Force on Money Laundering (FATF) has prepared guidelines for regulating the cryptocurrency industry. They will be published on October 28th.
According to the minutes of the October FATF plenary meeting with the International Monetary Fund (IMF), the UN and the World Bank, the updated recommendations on cryptocurrency regulation will be published next week.
FATF released this guide in 2019. It includes the “Travel Rule” principle, which obliges virtual asset service providers (VASPs) to exchange information with each other about the participants in transactions. Some jurisdictions are already beginning to implement these standards, but this raises the question of the secure transfer of information about the counterparty.
Later, the regulator decided to tighten the standards, “adjusting” to them and decentralized finance (DeFi). That being said, it is unclear how the FATF standards will apply to DeFi as they work differently from traditional financial institutions. This is likely the reason why the FATF did not provide updated guidance in June 2021 as planned.
FATF President Marcus Pleyer said the revised guide will detail how FATF standards can help combat money laundering through cryptocurrencies and their use for illegal activities. According to him, the management will clarify the definitions of virtual assets and VASP, clarify the process of their registration and licensing, and will also cover the principle of “Travel Rule”.
The updated guide will explain how the FATF standards should apply to peer-to-peer transactions and stablecoins. In addition, the recommendations will help identify and mitigate the risks associated with cryptocurrencies. Player expressed the hope that after the publication of the updated guidance, countries will begin to implement it as soon as possible.