Categories: Bitcoin Business

FATF Recommendation 16 Could Send Bitcoin “Back To The Dark Ages”

Click here to view original web page at cryptobriefing.com

Crypto is approaching one of the most critical, and potentially destructive, moments in its history: and very few people even seem to know about it. At least, that’s according to Joseph Weinberg, co-founder of Shyft Network and a long-time player in the space.

Weinberg, who is also a special advisor on blockchain issues to the OECD, believes that a new implementation note from the Financial Action Task Force (FATF) could radically change how the crypto industry operates.

The new standard will apply FATF’s Recommendation 16, which requires banks to share customer information, to any virtual asset service provider (VASP) involved in trading or transmitting virtual currencies. FATF is expected to ratify the recommendation by the end of June.

The recommendation could require wallet providers and exchanges to share data about their customers with one another; personal data might have to be embedded into transactions on public blockchains. “There will be no right to be forgotten,” Weinberg told Crypto Briefing. “Your data will be completely public for all to see.”

That has serious ramifications outside of data privacy. The FATF recommendation could effectively push regulation-abiding cryptocurrency businesses out of compliance.

Data privacy laws, like GDPR in the EU, mandate that users own their own data. But it will become impossible for exchanges to give users control over their own data while simultaneously following the new FATF recommendation, according to Weinberg.

“The only actors that’ll remain compliant are the banks,” said Weinberg. They already have the infrastructure in place to continue operating without any significant disruption if the new recommendation becomes ratified.

“This will push Bitcoin back to the dark ages,” Weinberg added.

What is FATF?

FATF is focused on coordinating action to combat international money laundering and terrorist financing. Among its thirty-six members are some of the world’s largest economies and trading blocs, including the US, China, India as well as the European Commission.

There have been efforts by some industry representatives to delay the new implementation. Last month, hundreds of industry representatives, including compliance officers at Elliptic and Diginex, went to FATF’s headquarters in Vienna to try to make their case.

But Weinberg says these efforts lacked the backing of big players as well as support from the community. “What’s worse is that the space doesn’t even know this is even happening,” he added.

Because FATF has jurisdiction in almost all of the world’s leading economies and trading blocs, there will be little chance for “regulatory arbitrage,” the strategy of moving to the country with the friendliest regulations.

FATF’s cryptocurrency recommendation is unpopular

The Electronic Money Association (EMA), which promotes fintech in Europe, has already expressed concerns that the new standard could hold back the unique advantages of blockchain technology.

“We therefore have concluded that it would not be appropriate to apply Recommendation 16 to VASPs and virtual assets and urge the FATF to re-think its approach,” the trade body wrote in a note last month.

Even entities ostensibly on FATF’s side have expressed concern over the new requirement. Chainalysis, which provides surveillance techniques to track illegal activity on the blockchain, filed a public letter in April arguing that the industry does not have the infrastructure required to meet the recommendations.

Restrictive regulation has a clear impact on the health of the industry. Payments platform Circle, backed by Goldman Sachs, had to lay off 30 members of staff recently. Uncertainty and possible restrictions in the U.S. meant the company had no choice but to take this “deeply frustrating step,” said CEO Jeremy Allaire in a blog post.

It’s very like that the recommendation will now go through. One source, who declined to be identified, said that the FATF’s refusal to at least re-consider the recommendation is no coincidence. They suggested that the current FATF President, U.S. Treasury official Marshall Billingslea, is attempting to push through the bill before his term ends on June 30th.

Although there are procedures in place to change or amend FATF requirements after they have been implemented, this is exceedingly hard to do.

Any action now will be too little, too late, Weinberg says: and the industry will likely have to come to terms with the new reality.

cinerama

Illuminati, Mason, Anonymous I'll never tell. I can tell you this, global power is shifting and those who have the new intelligence are working to acquire this new force. You matter naught except to yourself, therefore prepare for the least expected and make your place in the new world order.

Disqus Comments Loading...
Share
Published by
cinerama

Recent Posts

It’s Expiry Friday, Will Bitcoin’s Price Fall Once More?

In precisely five days, the September fiat settled bitcoin futures contract at CME expires.Yes, another month is nearly over, so… Read More

6 hours ago

‘Big Four’ Auditor Deloitte to Let Employees Buy Lunch with Bitcoin (BTC)

The “Big Four” auditing firm, Deloitte’s Luxembourg unit is working on letting its employees pay for lunch using cryptocurrency, especially… Read More

6 hours ago

Patrick Byrne Sells Overstock Shares for Crypto and Precious Metals

Patrick Byrne , the former chief executive of Overstock.com who sent shockwaves through the blockchain community not too long ago… Read More

6 hours ago

Canada’s Bit Farms Buys More Than 2,000 Mining Machines

Bit Farms, a cryptocurrency mining company stationed in Canada , has bought more than 2,000 new A10 Avalon mining machines… Read More

6 hours ago

Key Economic Indicators Due This Week a Gauge of Consumer Strength

In addition to economic data, the stock market anticipates comments from dovish St. Louis Fed President James Bullard this week.… Read More

6 hours ago

Digital assurance: The “Killer app of Blockchain” according to VeChain

Digital assurance: The "Killer app of Blockchain" according to VeChain According to Sunny Lu, the co-founder, and CEO of VeChain,… Read More

6 hours ago

This website uses cookies. We use these cookies to collect data about your interaction with our website for the purpose of continuously improving your experience with our site. For more information we encourage you to read our privacy policy.

Read More