G20 Wants Tougher Rules for Cryptocurrencies; Urging Members To Adopt FATF Standards
G20 central bankers and finance ministers want to push for a wider adoption when it comes to the standards compelling crypto exchanges to disclose information about users.
After a weekend summit in Riyadh, the Saudi Arabian capital, G20 members of financial institutions said countries haven’t aligned themselves with the international and intergovernmental standards imposed by the Financial Action Task Force (FATF). Here’s what a communicate released after the summit reads:
“We urge countries to implement the recently adopted Financial Action Task Force (FATF) standards on virtual assets and related providers.”
The Travel Rule Aims to Prevent Money Laundering and Terrorism
Being finalized in the summer of 2019, the FATF’s travel rule requires exchanges and wallet providers, so all virtual asset service providers (VASPs), to share information about users with each other each time funds are being transferred. This action aims to prevent money laundering and terrorism funding done in cryptocurrencies, also to identify those who want to bypass the crypto regulatory measures. In June 2019, the G20 said it will comply with the new FATF rules.
FATF Recommendations Leave Room for Interpretation
FATF rules and recommendations allow authorities to make interpretations according to the local law. Countries that will not respect these rules or refuse to adopt the recommendations are at risk to be blacklisted and eventually cut off from important global trades and from investment. For this reason, many G20 economies and FATF members have adopted the travel rule already.
For example, Singapore and South Korea have passed a VASP compelling legislation built on the new anti-money laundering legal framework. Let’s also not forget that the EU’s 5th anti-money laundering directive (AMLD5) was enforced at the beginning of this year. AMLD5 requires exchanges to be registered with local regulators and to comply with FATF’s new rules.
More Research to Be Done on Global Stablecoins
Since the need for having a global remittance solution to stablecoins is growing, G20 ministers also reiterated an October 2019 statement that calls on countries to do more research in assessing the risks of issuing global stablecoins. The communicate released after the summit furthermore asks authorities to be of assistance to the Financial Stability Board (FSB). The FSB monitors how vulnerable the global financial system is, all while coming up with recommendations on cryptocurrencies’ global regulations.