FATF updates guidance on crypto service providers, calls for public comments

The Financial Action Task Force is looking to adapt its guidance standards for stablecoins and crypto peer-to-peer transactions.

The Financial Action Task Force says it is set to publish an update to its guidelines on cryptocurrencies and virtual asset service providers; a catch-all term including exchanges, wallet providers, and custody platforms, among others.

This updated document will also be made available for public consultation from key stakeholders.

According to a circular issued by the FATF on Thursday, the decision to update its guidance on VASPs was the result of the organization’s three-day plenary session.

As part of its announcement, the intergovernmental that focuses on policies aimed at combating money laundering and terrorist financing revealed that the updated guidelines will be published in the first week of March.

The new guideline will be an update to the June 2019 document that introduced the travel rule compliance for VASPs. The FATF travel rule requires all VASPs to share transaction data for both senders and recipients on their platform.

In its 12-month review document published in June 2020, the FATF remarked that some progress had been made in implementing the crypto travel rule. A previous report issued in March 2020 identified United States-based VASPs as largely compliant.

Indeed, as previously reported by Cointelegraph, Asian countries are reportedly leading the way in implementing the FATF travel rule with exchanges in Singapore and South Korea said to show the highest level of compliance.

The upcoming updated FATF guideline for cryptocurrencies and VASPs will also cover stablecoins and crypto peer-to-peer transactions.

According to the FATF communique, feedback from the public consultation will form part of its final guidance on cryptos and VASPs to be approved in June 2021.

While the FATF maintains the need for risk-based supervision of cryptos and VASPs with respect to Anti-Money Laundering and Combating Terrorist Financing, it is important to note that illicit cryptocurrency transactions continue to decline.

In its 2020 crypto crime report, blockchain intelligence firm Chainalysis revealed that crime-related transactions only accounted for 0.34% of all cryptocurrency activity for the year.

Indeed, both the proportion and actual dollar value of crypto crimes declined between 2019 and 2020.