In more guidance published today by the Financial Action Taskforce, there is a call for more disclosure and regulation of the cryptocurrency ecosystem, in particular the areas of stablecoins, DeFi platforms, and peer-to-peer transaction services.
The FATF published their report today on how best to tackle the problem of money laundering and terrorism financing in the crypto sector. The global watchdog has members from around 200 countries and provides guidance to the likes of the US Treasury, which will release its own stablecoin guidance in the coming days.
The stablecoin sector is accused by the FATF of thinking that it does not need to follow many of the existing financial regulations. Therefore, it is looking to impose more rules on the cryptocurrency infrastructure such as exchanges and custodians.
According to Bloomberg, FATF President Marcus Pleyer stated:
“We expect that the countries will implement this as soon as possible,”
The FATF guidance on stablecoins will mean they will have to adhere to all existing rules. This will mean that they will be obliged to carry out all required anti money laundering and anti-terrorism checks.
For peer-to-peer transactions, the FATF has recommended that countries impose their own additional requirements, such as enhanced record-keeping, and using only approved wallet addresses.
For DeFi, any authority that has control or influence over the operations of a decentralised finance app, ‘might’ have to comply with the FATF rules. The FATF guidelines also stated the following:
“It seems quite common for DeFi arrangements to call themselves decentralized when they actually include a person with control or sufficient influence, and jurisdictions should apply the VASP definition without respect to self-description,”
The guidelines further clarify that if a team behind a DeFi dApp “sold or distributed related governance tokens to investors and users,” then it would be responsible for carrying out all anti money laundering checks.
It further said that if an authority behind the dApp couldn’t be identified, then countries can request that a regulatory authority step in to help control it and mitigate risks.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.