Quick Facts:
- FATF releases new guidelines in the supervision of cryptocurrency exchanges and custodians.
- The new regulations also focused on stablecoins management globally.
The Financial Action Task Force (FATF) released a new report to G20 member states and other countries laying out recommendations on creating a more reliable regulatory web across the globe to govern cryptocurrencies, the service providers, and others.
The FATF is an independent governmental body that promotes policies in the financial system to prevent terrorism financing, money laundering, and funding weapons of mass destruction. Recommendations that form the body usually shape the financial regulatory laws of most countries across the globe.
According to the statement, the council leading calls on virtual asset service providers (VASPs, such as crypto exchanges and custodians) and virtual assets to be subject to AML/CFT compliance, as other financial entities are, and foster the implementation of the “Travel Rule.”
Furthermore, financial supervisory bodies are urged to create institutions that “license or register VASPs and respond to international co-operation requests regarding VASPs.”
FATF recommendations on the regulation of the crypto field are still a work in progress, and the upcoming meeting in October amongst G20 finance ministers and regulators will discuss the matter further.
The report also focused on “so-called stablecoins,” exclusively naming four of the top stablecoins in the crypto market – Tether’s USDT, DAI, USDC, and True Coin (TUSD) – in the report. FATF recommends setting up KYC/AML rules to surveil the transaction of these stablecoins across the globe.
FATF revised its Standard in the new report on stablecoins to explicitly apply to virtual assets and VASPs who provide stablecoins. Stablecoins will now be classified as a traditional financial asset, e.g., security or a virtual asset depending on what it gives.
FATF further urges global financial regulators to implement the recommended Standard “as a matter of priority," calling on the G20 member states to lead by example. In its part, FATF will continue providing guidance on the regulation of VASPs and virtual assets (stablecoins included) and enhance the global framework across financial regulators to share information and strengthen regulatory capabilities.
