When it comes to the financial world, whether it’s crypto or fiat criminal activities such as theft, fraud and hacks are prevalent.
Crypto is a new and controversial investment vehicle, an entirely different way of processing payments, and, essentially, a way to get around traditional financial institutions that rule the world.
Over the past few years, the mass adoption of digital currencies grew exponentially triggering more and more concern from regulators and financial institutions. Up until 2019, crypto regulation was either non-existent or immature, and there was an apparent lack of consensus on how to protect crypto users.
It took a step forward during the G20 Summit, where representatives discussed the new course of legal action proposed by the international Financial Action Task Force (FATF). It sets out that its 30 members should impose the rules for cryptocurrency services. It requires them to monitor and report suspicious transactions and share data on cryptocurrency users with other platforms (i.e. exchange to exchange).
Fifteen countries, including G7 members, Australia, and Singapore pledged to cooperate in setting up a system for monitoring cryptocurrency transactions together with the FATF, a new report states.
FATF, the international money-laundering watchdog, would oversee the project. They aim to prevent the movement of funds for illicit purposes, such as money laundering and funding of terrorism, by collecting and sharing transaction data, as well as the personal information of cryptocurrency users.
In addition to that, FATF announced last month to have given its permission for Japan to lead the creation of an international cryptocurrency payments network similar to banking network SWIFT, also aimed to fight money laundering. Japan was the first country to introduce a legal framework for cryptocurrency exchanges in 2017. International cooperation may speed up the development of legal measures.
Some argue that such laws will do more harm than good. Compliance with FATF recommendations and the introduction of reinforced KYC/AML procedures will indeed increase compliance costs for crypto companies, and it takes time to implement.
Additionally, some of the users expressed their frustration as the recommendations came out. However, for a regular user with no bad intentions or criminal background, KYC shouldn’t be a problem. At Mercuryo, for instance, only a tiny percent of users fail pass KYC, the absolute majority of users pass it in no time.
Certain exchanges might try to evade the compliance through operating offshore or prohibiting U.S. investors from signing up, but the majority have no choice but to comply with regulatory demands or face the consequences.
As the world changes, it is your choice whether you change or stay behind.