- The Financial Action Task Force (FATF) is set to finalize new international standards for regulating cryptocurrency firms next month.
- Those standards are widely expected to subject crypto exchanges, wallet providers and others to the “travel rule” long followed by correspondent banks.
- Industry representatives say this requirement would be onerous if not unworkable for crypto businesses, and bad for user privacy.
- FATF “recommendations” aren’t legally binding, but countries that don’t follow them get blackballed in the global economy.
The cryptocurrency industry is bracing for forthcoming international regulatory standards that would require exchanges to collect and share information about where and to whom they are sending money.
This would go beyond the basic “know your customer” (KYC) rules that bedevil many crypto users. In addition to verifying and keeping records of their own users’ identities, exchanges and other service providers would have to pass customer information to each other when transferring funds, just as banks are required to do. This is known in the U.S. as the “travel rule”.
Many in the blockchain industry have argued that this practice is at best onerous if not completely unworkable with cryptocurrency and apt to drive users away from regulated platforms.
Industry representatives recently made a last-ditch effort to persuade the Financial Action Task Force (FATF), an intergovernmental body, to reconsider or delay the proposed standard.
About 200 to 300 people, ranging from chief compliance officers of top exchanges to regional bitcoin brokers, attended FATF’s consultative meeting in Vienna, Austria, on May 6–7 to voice their concerns.