FATF which is known as “The Financial Action Task Force” is a foundation of the G7 organization that was formed to fight the evils like money laundering. It is a government recognized force that works as a watchdog of the government and keeps a check on illegal activities like counter-terrorism-financing and money laundering.
As there was a certain assumption concerning cryptocurrency as well that this platform is being used for evil practices like laundering, financing terrorism, drugs buying etc. that is when the countries around the world included cryptocurrencies in virtual assets to keep a check on these activities. FATF deals through these VASPs to look after these practices and hinder through the rules and regulations that they have laid while someone deals in cryptocurrencies as well. If you want to invest in bitcoin then read the tips for bitcoin trading.
In 2018, this organization started to keep its focus on crypto by including it in VASP which is “Virtual Asset Service Provider”. This term includes in it most of the businesses that might be associated with cryptocurrency. The countries that have taken membership need to abide by the rules as per the FATF rules to face the risk associated with the VASPs. The countries have been giving their time to let them understand about the cryptocurrency and bringing them into their local regulations to accept the mandatory obligations as laid by the FATF. Any country that wants to accept FATF regulations first needs to register with their country’s regulation and in the second process take the license to operate it.
HOW OTHER COUNTRIES ARE DEALING WITH CRYPTO REGULATION
The countries across the whole universe had been working through varying mechanisms to bring reforms in this field to resist it from the activities that might enhance the evil practices. Any country that is operating in cryptocurrency works on its own terms.
- Asian countries like Japan and Singapore in their “payment service act” have reforms in their cryptocurrency while other countries like Hong Kong, UK, South Korea have brought FATF proposals to their crypto reforms concerning their virtual assets.
- Talking about Europe, it is working towards reforming and regulating digital assets before the pre-decided period.
- In the United States, MSB which is known as the “money service business” is a mode for reformation and then they apply for a license for the transmission of money. As per the states in which you are operating this process varies in terms of complexity and expensiveness.
Hence, just like the above-mentioned reforms, all countries that are operating through cryptocurrency as well lay their own terms.
WHAT ARE THE CHALLENGES ASSOCIATED WITH THE FATF RULES?
As in 2019, there had been no known rules concerning the FATF and no facilitation of such technology as per the requirements. Although there have been some “technical solution providers” that have brought to the market Sygna Bridge, CoolBitX’s Zynga Bridge, NetKl etc. to provide the solution to these digital problems. But the two main issues related to the TSP and VASPs are:
- The first such issue that it faces is interoperability for sharing the data that can be further transferred amongst the exchanges by applying the various solutions.
- Secondly, the issue that is faced is the “sunrise issue” as per different jurisdictions. An example that can be illustrated to make it easier to understand is, one VASP needs to oblige by the rules and regulations of the other country’s VASP that it follows, whereas others do not need to do so.
I hope the topic cleared your doubt regarding regulating cryptocurrency through FATF regulations across the different countries through their different mechanisms.