The Financial Action Task Force (FATF) will publish its updated guidelines on crypto sector policing next week – and will broaden its scope to include stablecoins, peer-to-peer (P2P) platforms, non-fungible tokens (NFTs), and decentralized finance (DeFi).
The body also wants to see evidence that countries are applying its much-maligned Travel Rule, a key anti-money laundering and counter-terrorism financing measure.
The FATF sought feedback from the sector ahead of a major overhaul of its 2019 crypto guidance, which focused heavily on what it terms Virtual Assets – tokens like bitcoin (BTC) – and Virtual Asset Service Providers (VASPs), namely crypto exchanges and wallet providers.
But the FATF has previously acknowledged that the guidelines are not comprehensive. And in an official release, it stated that its October plenary session, which wrapped up yesterday, had concluded that the crypto sector was “fast-moving and technologically dynamic, which means continued monitoring and engagement between the public and private sectors is necessary.”
The body said that its new guidance will be published on October 28, and “in particular” clarifies the “definitions of virtual assets and VASP and builds on the FATF report to the G20 to explain how the FATF standards apply to stablecoins.”
The FATF spoke of the need to “address the risks for peer-to-peer transactions,” and said it would “illustrate tools to identify and mitigate these risks.”
NFTs and DeFi will likely fall under the microscope, but firm regulations may still be some way off, as the body said it would “be vigilant and closely monitor the virtual assets and VASP sector for any material changes that necessitate further revision or clarification of the FATF standards” – particularly in regard to NFT, P2P and DeFi policing.
Regardless, it appears some G20 regulators are already expecting clearer guidance on the NFT and DeFi front. Earlier this month, the head of the South Korean Financial Intelligence Unit (FIU) Kim Jeong-gak said that the nation was keeping an eye on forthcoming future recommendations from the FATF about NFTs and DeFi – and would seek to act accordingly.
Exchanges, meanwhile, will be bracing themselves for a fresh regulatory onslaught.
The FATF said its new guidance “covers the licensing and registration of VASPs,” as well as the Travel Rule and “includes principles of information-sharing and cooperation amongst VASP supervisors.”
Although it still spoke of the need to “assist countries and the private sector in implementing the current FATF standards,” it underlined the fact that it expects governments to fall into line – or face the consequences, writing:
“The FATF expects that countries and the private sector will implement FATF standards on virtual assets and VASPs as soon as possible, especially in light of this updated guidance.”