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FATF is increasing pressure to regulate cryptocurrencies



The Financial Action Task Force (FATF) is starting to put pressure on countries to enact strict crypto regulations. The international organization to combat money laundering recently updated its guidelines and now also mentions NFTs and DeFi as well as P2P crypto trading and stablecoins for the first time.

The FATF published a number of groundbreaking guidelines back in 2019 . These guidelines included the much-criticized reporting protocol for crypto exchanges "Travel Rule". In a document released today, the FATF announced that it had updated and expanded the existing 2019 guidance.

The panel reiterated its commitment to the Travel Rule and issued a warning. It claims that there is "a lack of enforcement of the Travel Rule by the jurisdictions". It was stated that the private sector should "invest more heavily in solutions for Travel Rule."

The FATF advised companies to take the initiative to comply by writing:

Regardless of the lack of regulation in the beneficiary jurisdiction, the clients can require the beneficiaries to comply with the travel rule through contracts or business practices.

Update of the old guidelines

The FATF has further refined its definitions of “virtual assets” and their providers. The organization warned that "there should be no case where a relevant financial asset is not covered by FATF standards."

Also Stablecoins came in the document under attack. FATF believes that such digital tokens are classified as crypto assets or financial assets. When it comes to crypto assets, they need to be monitored accordingly. And if they are classified as financial assets, they should be supervised accordingly.

The FATF went on to say that many DeFi networks are less decentralized than they claim to be. The document states:

It seems quite common for DeFi agreements to refer to themselves as decentralized when in reality there is one person with control or sufficient influence. Jurisdictions should apply the VASP definition regardless of self-description.

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