The global regulator has presented the final requirements for the cryptosphere
The Financial Action Task Force on Money Laundering (FATF) has published a revised and final version of the guidelines on the regulation of cryptocurrencies.
For the first time such a guide was released in 2019. According to the FATF recommendations, exchanges and other crypto services, referred to in the document as "virtual asset service providers" (VASP), should be brought under global financial services regulatory standards. The main innovation was the requirement to collect and exchange customer data. It also caused major controversy due to the problematic nature of the secure transfer of information about cryptocurrency users. Despite this, FATF continued to tighten the requirements, including extending them to non-custodial wallets and decentralized finance.
The latest variation of the manual provides a number of clarifications regarding earlier requirements. Thus, the definition of a digital asset is given. To be included in this category, an asset must not only reflect value in digital form, but also be available for exchange and sale. For example, non-interchangeable tokens are not a digital asset, but should be regulated accordingly if the transactions performed with them fall under the FATF requirements.
VASP is recognized as any person acting as an intermediary in the exchange of virtual assets and providing services for their storage. It follows from this that VASPs are centralized exchanges, but services in the space of decentralized finance do not fall under this definition, since they are software. However, developers, owners and operators of DeFi services can be recognized as VASP if they retain significant control over the protocol, even if it is partially decentralized or automated.
Ultimately, FATF states, the regulation of cryptocurrency services should be carried out based on the characteristics of each individual project, despite the supposed decentralization.
"Apparently, it is quite common among DeFi protocols to call themselves decentralized, when in reality there is a person controlling or significantly influencing them. Jurisdictions should apply the VASP definition regardless of how the protocol describes itself," FATF adds.
In general, the FATF leadership should contribute to accelerating the regulation of cryptocurrencies in the world. Countries are invited to immediately begin developing rules for participants in the crypto industry, but a step-by-step approach is allowed.
"The final version of the guide does not clarify the FATF's expectations regarding the regulation of non-custodial wallets. In fact, they confirm the previously voiced idea that such transfers of digital assets should be perceived as transactions with an increased level of risk and subject to additional checks and restrictions," said Joseph Weinberg, co-founder of the Shyft service.