The Financial Action Task Force (FATF) last month updated its rules and guidelines for the monitoring and regulation of “virtual assets” (cryptos) and “virtual asset service providers” (exchanges). These new guidelines clarify that VAs and VASPs fall within the scope of FATF standards, which means countries will be judged on their performance on the new metrics devices by the FATF.
Cryptocurrencies remove the bank/financial institution as an intermediary. In the absence of global coordination, cryptocurrencies would make such financial flows outside the ambit of global law enforcement authorities. The guidance says that VASPs have the same full set of obligations as financial institutions and designated non-financial businesses and professions. The guideline further suggests that countries should apply all of the relevant measures under the FATF Recommendations to VAs, VA activities and VASPs.
These new guidelines have been circulated to all governments as well. The guidance outlines the “application of the FATF Recommendations to countries and competent authorities; as well as to VASPs and other obliged entities that engage in VA activities including financial institutions such as banks and securities broker-dealers, among others,”.
Governments and central banks are “required to take actions to identify natural or legal persons that carry out VA activities without the requisite license or registration,” the guidance says. This would be equally applicable to countries that have banned crypto as well as to those who allow it with regulation and monitoring.
In the United States, New York has a licensing framework, BitLicense, for private crypto exchanges. It is reportedly working on further clarifications of rules and regulations regarding cryptos. China, which has completely banned all cryptocurrencies, has declared that it will issue a digitised yuan. It continues to support blockchain and startups.
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