FATF Crypto Restrictions Looming: 9 Days to Tighter Crypto Regulations
While markets recovered in 2019, a new trend of restricting users and the size of fiat exchanges is stealing anonymity and freedom from the sector.
The cryptocurrency sector will face another challenge soon - this time, a new recommendation by the Financial Action Task Force (FATF), an international body creating multi-country policies against money laundering. Already, exchanges have started restricting users, and stepping up their screening procedures, or KYC.
On June 21, the international agency will publish a report with recommendations to local governments on how to handle cryptocurrencies, exchanges, and other related businesses.
FATF compliance can potentially affect more than 200 countries and require crypto exchanges to perform user verification. In the past, sudden requirements for de-anonymization have created problems such as verification backlogs. Some entities have also gone out of business due to regulatory pressures.
Till now restrictions and regulations were regional, and exchanges could find countries and regions with a more liberal approach. However, this time, the effect FATF policies could be global.
Even though exchanges had ramped up verification processes lately, new regulations are expected to restrict crypto exchanges and trading of more than $1,000 worth of digital assets. This time, the regulations will also extend to custodians, crypto hedge funds and any related businesses working with coins or tokens, reported Bloomberg.
The FATF has also created a special division to handle the challenges of fintech in general, and allow transaction innovation while not allowing international money laundering or shadow financing. The new regulations will mean that the popularization of digital assets with businesses may come with regulatory difficulties.
In the past, KYC procedures have also revealed flaws, potentially leaking user data. Even decentralized exchanges have been affected, as in the case of EtherDelta. Recently, exchange services like Changelly and Shapeshift removed their anonymity options, and even LocalBitcoins requires a form of verification, expecting to tighten KYC in the coming months.