Tuesday, October 20, 2020

9 days until the crypto industry must verify the identity of anyone sending $1,000 or more

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In just nine days, new rules by the Financial Action Task Force on Money Laundering (FATF) will force cryptocurrency businesses in roughly 200 countries to verify the identities of anyone sending or receiving more than $1,000 worth of digital assets, effectively nullifying their pseudonymity.

A number of US-based firms have responded by exploring the viability of a “global parallel system” that would allow the world’s cryptocurrency exchanges to share data in a bid to remain compliant, Bloomberg reports.

Hedge funds and investment firms that specialize in digital assets could experience trading delays and increased costs for making transactions.

Industry insiders have also warned of increased compliance costs, and say businesses that shirk their responsibilities could end up shutting down altogether.

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Factoring in the additional costs, FATF’s new rules could end up hurting small and medium-sized enterprises that might not have the resources to implement the new legal requirements – similarly to how BitLicense affected companies back in 2015.

According to Bloomberg, services with licenses to transmit money could face increased scrutiny from local government agencies and risk losing them altogether if they don’t comply with FATF’s rules.

Even so, countries themselves could take the hardest hit. Individual government agencies are tasked with ensuring compliance within their jurisdictions; nations that fail to comply usually end up on blacklists, eventually losing access to the global financial system.

It’s no surprise, then, that the central banks and finance ministers of G20 nations publicly pledged commitment to the FATF’s incoming guidelines at a recent summit in Japan.

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In the past, cryptocurrency companies have faced heavy criticism for forcing Anti-Money-Laundering and Know-Your-Customer restrictions on their customers at the behest of government agencies – but it looks like soon they won’t even have a choice.

Bitcoin spring may very well be here, but the wider blockchain industry is facing regulatory winter. Just great!

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