Bitcoin Exchanges Could Face New Cryptocurrency Regulatory Issues In The Near Future
- Regulations are coming to the cryptocurrency market
- The FATF will provide countries with a set of regulations to control the crypto space
Bitcoin and digital assets have expanded all over the world during the last years. The virtual currency reached $20,000 in 2017 and in 2018 it plummetted to $3,200. Since that moment, Bitcoin (BTC) recovered and it has started to grow once again.
On June 21st, the Financial Action Task Force (FATF) is expected to release a note in which it will clarify how countries could control and regulate these digital currencies.
Regulations Are Coming To The Crypto Market
In a recent report released by Bloomberg, the FATF will be publishing a note clarifying how nations should regulate virtual currencies. This is according to FATF spokeswoman Alexandra Wijmenga-Daniel, who talked to Bloomberg via email.
Eric Turner, the director of research at Messari Inc., said that it will be important to see how these rules are interpreted and applied by regulators in different nations. These recommendations could eventually have a larger impact than the U.S. Securities and Exchange Commission (SEC) or other regulators.
Apparently, companies such as Coinbase Inc. and Kraken or asset manager Fidelity Investments would have to collect information about customers initiating transactions of over $1,000 or €1,000. The firms will also need to know the details of the recipients of the funds.
John Roth, chief compliance and ethics officer at Bittrex, said that although this sounds simple, it will be costly and also technically difficult. For example, how would an exchange know who the recipient of the funds is when crypto wallets operate with pseudonymous.
Roth commented about it:
“It’s either going to require a complete and fundamental restructuring of blockchain technology, or it’s going to require a global parallel system to be sort of constructed among the 200 or so exchanges in the world. You can imagine difficulties in trying to build something like that.”
Jeff Horowitz, chief compliance officer at Coinbase, the largest U.S. crypto exchange in terms of trading volume, said that he gets why the FATF wants to implement these regulations.
However, he said that applying bank regulations to this industry could drive more people to conduct P2P transactions, reducing transparency in the market. Horowitz said that the FATF really needs to consider the unintended consequences of applying these rules.
According to Josh Gnaizda, chief executive officer of CryptoFundResearch, the regulations that the FATF is working on could affect more than 500 crypto funds that have surged in the last years. Nonetheless, compliance will take time and things will move slowly.