In November, the Financial Action Task Force (FATF) finalized its digital currency guidelines. It called on governments to hold DeFi operators accountable for any violations of AML regulations, making the legal status and future of DeFi uncertain in the United States. Sen. Pat Toomey (R-PA) had written to Treasury Secretary Janet Yellen for clarification on several points.
US Treasury’s secretary Janet Yellen clarifies FATF guidelines.
The FATF had previously clarified that the guidelines do not recommend software should be regulated but that the focus should be on identifying the individuals behind the projects and holding them to account. However, the FATF left many with questions about how to interpret some points in the guidelines. Essentially, Sec. Yellen has provided answers to some of these questions. She stated that she agrees with the FinCEN statement that reporting burdens would not fall on entities providing ancillary services such as wallet manufacturers, software developers, and miners. In other words, these entities, which do not take custody of users’ funds, will not be subject to Money Service Business registration.
Yellen also answered several other questions related to cryptocurrencies.
Treasury Secretary Janet Yellen also answered several other questions related to digital currencies and the industry in general. She clarified that the recent President’s Working Group report on stablecoins identified significant gaps in the authority of federal regulators to address the risks they pose. The report also recommended that stablecoin issuers should be regulated as insured depository institutions. This would essentially subject them to the same levels of supervision and regulation as banks. She also clarified that the previous Treasury recommendation for Congress to provide greater regulatory harmony between states had been revoked by the White House in February 2021.