Financial Action Task Force To Adopt New Crypto Guidelines

News, Regulation | June 13, 2019 By:

The Financial Action Task Force (FATF), a global money-laundering watchdog, will reportedly adopt new guidelines that would require crypto exchanges to share same user data as banks.

FATF spokeswoman Alexandra Wijmenga-Daniel told Bloomberg that On June 21, the agency will publish a note to clarify how participating nations should oversee virtual assets. The new rules will be applicable to businesses dealing with tokens and cryptocurrencies, including crypto exchanges, custodians and crypto hedge funds.

The FATF guidelines will reportedly require firms ranging from exchanges Coinbase and Kraken to asset manager Fidelity Investments to collect information about customers initiating transactions of over $1,000 or 1,000 euros. The watchdog will also require companies to submit details about the recipients of the funds, and to send that data to the recipient’s service provider along with each transaction.

Jeff Horowitz, chief compliance officer of Coinbase, said that US exchanges may lose customers because of the new FATF law, as instead of going through an exchange or another virtual-asset service provider (VASP), some may simply start trading with others directly, to safeguard their privacy.

“I get why the FATF wants to do this,” said Horowitz. “But 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. The FATF really needs to consider the many unintended consequences of applying this specific rule to VASPs.”