The entity is intending to monitor all operations out between bitcoin exchanges. The group aims for better control and surveillance with a centralized approach.
The Financial Action Task Force released a preliminary update on its guidelines regarding bitcoin, cryptocurrencies, and other crucial digital asset service networks. In one section, the entity talks about forbidding every transaction to and from private wallets (self-custodians) in the case of peer-to-peer or P2P transactions.
The organization states that countries must understand the “risks” of operations of this kind to fight money laundering and terrorist financing. The FATF suggestion is to limit the interest of States taking action to “mitigate” P2P processes.
The guideline suggests denying the license to digital asset service providers (VASPs) if they dare to permit transactions to/from non-obligated entities (i.e., private / non-hosted wallets) to accept trades only from/to other services providers of digital assets.
The guideline also suggests that traders could only complete a transaction within a bitcoin exchange or between multiple exchanges. The potential ban would make traders avoid withdrawing their funds to their private wallets but leave them at exchange houses or move them between them.
The funds that operate from that wallet to an exchange would not be allowed to comply with the ‘travel rule.’ According to the rule, exchanges must share information about those users who carry out operations that surpasses $ 1,000.
VASPs’ mission is to get the awareness of all times a transaction is in process, the origin of such transactions, and where they are going. The FATF and this dynamic could be facing an obstruction about using the particular wallets that each user has on their phone.
FATF Centralized Oversight over the Main Cryptocurrency
The FATF guidelines and those other actual suggestions that it does this time seem far from being the complete solution that the industry needs. According to Grob, this is another attempt by supervisors to “control the issue.”
Quoted by digital means, the director explained that the approach that the group tries to implement mainly bases on centralized control or surveillance. The FATF’s purpose would be to give a closer look to financial operations on “all parties similarly, regardless of technology.”
ATwitter user Peter Slagter (@pesla), posted that the FATF draft is an ongoing war on cash and privacy. “It is as optional, but it’s still vicious.”
The FATF would launch a more solid guide for cryptocurrencies and service providers related to bitcoin. This draft is an update of the organization’s guidelines for malicious actors not to launder money or finance terrorism using cryptocurrencies.
The FATF was created in 1989 and received the support of 40 countries. It has since formulated recommendations and a standard to minimize money laundering and terrorist financing. It does not proclaim laws but guidelines that each country may adjust to its local laws or not.
By: Jenson Nuñez
