
Global Regulators Back Tougher Rules To Prevent Criminals From Using Crypto (wsj.com) 79
Cryptocurrency firms could be forced to take greater steps to combat money laundering under new guidelines released on Thursday by the Financial Action Task Force, an international body that coordinates government policy on illicit finance. From a report: The task force called on governments to broaden regulatory oversight of crypto firms and force more of them to take measures such as checking the identities of their customers and reporting suspicious transactions to regulators. The FATF's guidelines don't have the force of law, and would need to be implemented by national regulators in each country. Still, the Paris-based group is influential in setting standards for government policies against money laundering and financing of terrorism, and its guidelines could shape new crypto regulations around the world. More than three dozen countries are FATF members, including the U.S., China and much of Europe.
Representatives of the crypto industry criticized the guidelines, saying they would undermine privacy, stifle innovation or simply not work in the context of blockchain and digital-asset technology. "It would be inappropriate for anything like these non-specific and confusing standards to replace the current law and regulations we have on the books here in the U.S.," Peter Van Valkenburgh, research director at crypto advocacy group Coin Center, wrote in a blog post on Thursday. Among the targets of the FATF's guidelines is decentralized finance, or DeFi for short. DeFi is an umbrella term for various efforts to implement traditional financial activities -- such as lending or trading -- using software rather than a central intermediary to oversee transactions. DeFi has grown rapidly since last year, with over $100 billion of assets posted as collateral in various DeFi projects, according to data provider DeBank. The guidelines take aim at DeFi projects such as decentralized exchanges, in which crypto traders can swap assets with each other, typically on an anonymous basis. The task force said the people or companies that own or operate such decentralized platforms could be considered virtual asset service providers, or VASPs, a designation that would force them to check users' identities and take other measures against money laundering.
Representatives of the crypto industry criticized the guidelines, saying they would undermine privacy, stifle innovation or simply not work in the context of blockchain and digital-asset technology. "It would be inappropriate for anything like these non-specific and confusing standards to replace the current law and regulations we have on the books here in the U.S.," Peter Van Valkenburgh, research director at crypto advocacy group Coin Center, wrote in a blog post on Thursday. Among the targets of the FATF's guidelines is decentralized finance, or DeFi for short. DeFi is an umbrella term for various efforts to implement traditional financial activities -- such as lending or trading -- using software rather than a central intermediary to oversee transactions. DeFi has grown rapidly since last year, with over $100 billion of assets posted as collateral in various DeFi projects, according to data provider DeBank. The guidelines take aim at DeFi projects such as decentralized exchanges, in which crypto traders can swap assets with each other, typically on an anonymous basis. The task force said the people or companies that own or operate such decentralized platforms could be considered virtual asset service providers, or VASPs, a designation that would force them to check users' identities and take other measures against money laundering.