The Financial Action Task Force (FATF) has just released revised guidelines for the cryptocurrency sector. The organization has set standards for the DeFi and NFT industries.
The initial version of the FATF guidelines was introduced back in 2019. Then, crypto exchanges and other virtual asset providers (VASPs) were required to comply with rules to fight money laundering and terrorist financing, by analogy with ordinary financial companies.
In particular, industry participants were obliged to exchange data of the users transacting between sites. In June 2021, the FATF noted most jurisdictions have not yet implemented these requirements and urged authorities to accelerate the process.
In the updated version of the guidance, the FATF recommends that supervised countries be flexible in the early implementation of the requirements. The organization has acknowledged VASPs and other market players are experiencing some difficulties in integrating the new systems needed to ensure compliance. FATF analyst Ken Menz told CoinDesk:
"We recognize there is a lot of effort that goes into building the compliance tools to do this. And there may be a certain level of time that a VASP needs to invest in the necessary technologies to enable them to comply."
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The FATF believes regulators should broadly interpret the definitions used by companies and classify them according to the services they offer. According to the organization, this is necessary to effectively combat illegal financial activities:
"So, not to focus on the terminology, not to focus on whether something calls itself DeFi and look about what we call owner-operators of DeFi arrangements and the extent to which there’s control or sufficient influence over that protocol in determining whether it would be VASP."