While the rest of the world was impatiently eying the G20 summit with a curious question on how the trade war between USA and China will escalate, the cryptocurrency enthusiasts waited for a different decision. Today comes with a long-awaited decision on global cryptocurrency regulation.
The G20 has made it clear – crypto will be regulated with the standards of FATF. The new regulation will help prevent money-laundering, theft schemes, and minimize the financing of terrorism.
Basically, the new regulations will oblige cryptocurrency exchanges to store senders and beneficiaries names and public addresses during transactions. The FATF gives crypto exchanges 12 months to implement all the innovations that are in the final report.
While these innovations sound very harsh at the first glimpse, this applies to centralized exchanges only. These innovations include gathering and storing the data of originator’s name, their wallet public address, originator’s physical address, date and place of birth, and the unique customer ID. As for the recipient – name and wallet address data will be collected.
Just finished two days of discussions with FATF over AML rules for exchanges. It is clear FATF does not understand our industry and are just applying ill-fitting rules from the banking industry. FATF says these rules will not change, but we will see about that #V20Osaka— Daniel Kelman (@danielkelman) June 29, 2019
Yes, it sounds very harsh and controlling – just like any other traditional fiat brokerage or bank. As expected, these new guidelines weren’t accepted with cheers and flying hats in the air. Coinbase, Circle, and Chainalysis quickly rushed to comment that the new guidelines will require for the entire crypto community to collaborate. Moreover, they explained that these new implications will also require financial resources in order to fully comply with the new regulations.
It is expected that not all crypto exchanges will comply with the rules. Some experts say that a few exchanges might even go “into the dark sector”.
However, the FATF says that these regulations aren’t obligatory. If an exchange chooses not to follow these guidelines, it will be put in a “blacklist”, and possibly by doing so, it will lose a large amount of foreign investments.
This phrase is popping up even more and more in the last days. Bank officials and G20 members are saying this over and over again. However, they also say that they are closely monitoring this industry. Of course, they are monitoring. Just in case anything happens, and they need to intervene.
Additionally, this could mean the rise of decentralized crypto-exchanges. While our favorite exchanges now will ask for every information on you they could possibly ask, decentralized exchanges will stay on the “dark” sector and will operate without collecting any customer data.
Since privacy is one of the main advantages in crypto, this decision on FATF guidelines shows that the regulators haven’t actually understood the industry as such. Also, this could potentially trigger the rise of privacy coins like Monero and ZCash.
What are these regulations for, if eventually they are only meant breaking them and making crypto more fiat-like?