By Staff Writer
Global anti-money laundering watchdogs are likely to impose strict and onerous rules on crypto exchanges, according to Coindesk.
Paris-based Financial Action Task Force (FATF) is reportedly on the verge of adopting rules that would require crypto exchanges to pass customer information to each other when transferring funds, just as banks are required to do.
This has made crypto operators quite nervous, triggering a major lobbying effort aimed at asking the FATF to reconsider or delay the proposed standard.
But the regulators “appeared set on finalizing the standard with at most minor tweaks,” ConDesk reported, quoting four unnamed people who attended the FATF’s consultative meeting held in Vienna on May 6-7.
At issue is a single paragraph in the interpretive note on “virtual asset service providers” (VASPs), a category that includes exchanges and hosted wallet providers, that FATF put out for public comment in February.
Paragraph 7(b) reads in part:
“Countries should ensure that originating VASPs obtain and hold required and accurate originator [sender] information and required beneficiary [recipient] information on virtual asset transfers, submit the above information to beneficiary VASPs … and make it available on request to appropriate authorities.”
For Joseph Weinberg, co-founder of the blockchain startups Shyft Network and Paycase Financial, this “would become excessively onerous to manage and could drive the entire ecosystem back into the dark ages.”
Unlike a wire transfer, which by design requires bank, branch and account numbers for the recipient, a crypto transaction requires only an address.
While the FATF recommendations are not legally-binding international law, its rules have significant power because the FATF’s members include 36 economies and two regional bodies that are some of the largest and most important financial systems in the world.