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At my office we get a variety of different news papers and each morning I will flip through and read some of them to try and familiarize myself with things people might see in the paper and call about. Today several papers had the same topic covered in crypto and it was an eye catcher for sure. The Financial Action Task Force based out of Paris, France released some guidelines for combating cryptocurrency being used in illicit finance.
Now the Financal Action Task Force or FATF for short does not have any ability to enforce any rules rather they try to coordinate policy internationally and does have roughly 36 members signed on. Again they cannot force any one country to do anything but they still are very influential in policy setting. Members for the organisation include the United States, China, and most of Europe which really means the biggest financial markets in the world.
The biggest target from these guidelines was easily DeFi. While I would expect some pushback due to DeFi being decentralized which is not something previously seen in finance the amount of pushback in this guidelines is rather staggering. The guidelines call for the people/companies that own or operate the decentralized platforms to be designated as virtual asset service providers or VASPs. This designation would require that the providers check platform users identities and take other measure to prevent money laundering.
Now if you are like me you almost have to laugh at this because almost all decentralized exchanges are run by decentralized autonomous organizations or DAOs! Even in the name it states it is not centralized and while some are more centralized than other they still differ dramatically from a centralized exchange like Coinbase! This is pointed out by DeFi developers but FATF doubts the claim and says that most of them actually have a person with control or significant influence which again I have to point out a vast majority of these DAO are only becoming more decentralized as time goes on making this point moot!
Further enhanced regulations include VASPs tracking and sharing information about customers making transactions (this is information is literally on the blockchain so it bamboozles me that any respected organization would suggest this like the information is not there!?!) and even more invasive is that firms must check that neither the sender nor the recipient of the fund transfer are subject to sanctions. I am all for making sure that narfarious actors do not use crypto to work around sanctions. It harms the image of the coin/token and makes crypto and blockchain look bad in general. This is why the blockchains are public though as anyone can look up any wallet and any transaction!
The one recommendation that I do agree with is that stablecoin issues need to compile with antimoney-laundering rules. Stablecoins I personally feel should be regulated more then any other crypto due to what they are tied to and the constant value they are supposed to have. The other coins/tokens are investments and investments go up and down you can make a killing or lose a ton of money it all depends! Stablecoins though are different and because of that need to be treated differently.
Please know I am not a financial advisor I am just someone who picked up on a trend and wanted to express it! Makes sure you always do your own research and never invest money you cannot afford to lose! If you enjoyed this article and would like to further support me below are a couple of referral links that if you used when signing up I would appreciate it!
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