Intergovernmental organization Financial Action Task Force (FATF) has laid down some new regulations for cryptocurrency exchanges to combat money laundering and terrorism financing. The FATF has suggested that all exchange firms require to know about the receiving and sending party if the transaction is equal to or above $3000. But current technology used by exchanges does not allow that. This rule is followed by all other financial institutions except virtual currency exchange firms.
Neal Reiter, Direct of Product Management of Identity Mind in an interview to Forbes, said that the USA is most likely to implement these rules by the end of the year. This rule is called the “Travel Rule.” FATF consists of 37 countries that are responsible for regulating financial crimes like money laundering all over the world. However, it is not up to them to implement the regulations, only the country’s government can enforce the suggestions made by the organization.
The crypto community believes that if this “travel rule” is implemented the privacy that the crypto users enjoy might disappear. Many reports suggest that if the regulations are implemented, this could help build the confidence of the working-class people on the cryptocurrency and make it a mainstream mode of financial transactions. But the whole idea of introducing cryptocurrencies was to bring privacy in the financial structure.
It would be interesting to see how cryptocurrency exchanges comply if the government decides to enforce these new suggestions by FATF. Many exchange firms have already moved from the USA and other countries because of the increase in regulations, and have based their offices in places like Malta and Bermuda where restrictions are very limited. In the future, many other firms may also decide to settle outside the jurisdiction of the USA to escape the regulatory scrutiny.