The Financial Action Task Force (FATF) is starting to increase the pressure on countries to adopt strict crypto regulations. The organisation has recently updated its guidance to mention NFTs and DeFi as well as peer-to-peer trading and stablecoins for the first time.
The FATF has issued a landmark set of guidelines back in 2019. These guidelines included the much-maligned Travel Rule crypto exchange reporting protocol. In a document that was released today, the FATF announced that it had updated and improved existing guidelines to extend the 2019 guidance.
The body made sure to underline its commitment to the Travel Rule and issued a warning claiming that it had noticed a “lack of implementation of the Travel Rule by jurisdictions.” It stated that this was “acting as distinctive to the private sector to invest in Travel Rule solutions.”
The FATF advised businesses to take initiative with compliance writing, “Regardless of the lack of regulation in the beneficiary jurisdiction, originating entities can require Travel Rule compliance from beneficiaries by contract or business practice.”
Clarifying the old guidelines
The FATF has added detail to its definitions of what a ‘virtual asset’ and virtual asset provider are. The organisation warned that “there should not be a case where a relevant financial asset is not covered by the FATF standards.”
Staeblcoins came under fire within the document with the FATF concluding that fiat-pegged tokens are ruled to be crypto assets or financial assets. If they are to be ruled as crypto assets, they must be policed accordingly and if they are judged to be financial assets, they should be supervised accordingly.
The FATF went on to explain that many DeFi networks are less decentralised than they claim. The document said, “It seems quite common for DeFi arrangements to call themselves decentralized when they actually include a person with control or sufficient influence, and jurisdictions should apply the VASP definition without respect to self-description.”
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