Expert Takes: Implications Of New FATF Guidelines For Virtual AssetsMarch 23, 2021
The Financial Action Task Force (FATF), a global anti-money laundering watchdog, has released an updated guidance on digital assets and virtual asset service providers (VASP).
Some important changes in the updated guidance are as follows:
- DEXs or decentralized/non-custodial crypto exchanges and crypto-asset escrow services are considered Virtual Asset Service Providers (VASPs)
- Stablecoins are virtual asset (VAs) and FATF Standards apply to these financial instruments
- Only non-fungible tokens or NFTs that are able to potentially carry out money laundering (ML) and terrorism financing (TF) activities may be considered VAs
- VASPs need to “assess and mitigate” proliferation financing (PF) risks
- “Best practices” for counterparty VASP due diligence
- Options for “mitigating peer-to-peer transaction risks”
- Updated Travel Rule “clarifications and guidance”
The FATF guidance has clarified the definitions of Virtual Assets and Virtual Asset Service Providers. It also clarifies that for the purposes of FATF, central bank-issued digital currencies (CBDC) are not considered digital assets, though still makes the point that they are categorically considered fiat currency and thus still fall within the FATF responsibility. The guidance considers decentralized exchanges, platforms, or apps to be VASPs.
Below are some expert insights from the crypto and blockchain industry on the news.
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