The Financial Action Task Force (FATF), which is the global watchdog for money laundering said that it will be publishing regulations for crypto exchanges to tackle money laundering by next summer. This will be a major step towards creating international standards for an asset that is presently subject to patchy regulations.
On October 19, the Paris-based FATF said that jurisdictions worldwide need to regulate or license crypto exchanges and some firms that provide encrypted wallets in order to help in stamping out the use of virtual currency for terrorism financing, money laundering and other crimes.
It said that the firms providing financial services for issuing new currencies or initial coin offerings must also be subject to the new regulations. The global watchdog stated that until now, the regulation of ICOs has defied global coordination and has therefore led to a patchwork of different approaches being adopted by the national governments.
The extreme price volatility of Bitcoin, along with regular thefts from crypto exchanges has vexed regulators across the world. Countries have taken contrasting routes to tame the sector in the absence of global rules. In December 2017, the price of Bitcoin soared to a record high of near $20,000. However, the Bitcoin price has plummeted ever since then.
The FATF President, Marshal Billingslea stated that how countries implement the rules will be subject to periodic reviews by the global watchdog. He further added that countries that fall short during the review will be added to an FATF blacklist that will restrict their access to the global financial system. He said that by June next year the FATF will be issuing additional instructions on the standards and how they expect them to be enforced, as stated in the Reuters report.
The G20 member countries have been anticipating an October 2018 deadline for a movement on a global anti-money laundering standard pertaining to cryptocurrency. The FATF was called upon to clarify how its present AML standards could be applied to cryptocurrency, as reported on CoinDesk.
The FATF released a statement on October 19 clarifying its stance on publishing regulations for crypto exchanges by stating that there is an urgent need for all countries to take coordinated action to prevent the use of cryptocurrency for terrorism and crime. The FATF will prepare an updated guidance on a risk-based approach for regulating the crypto exchanges. This will include their monitoring and supervision and guidance for operational and law enforcement authorities to investigate and identify illicit activity involving cryptocurrency.[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]