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Global Organisation, Financial Action Task Force (FATF), Pushes for Global Strategies to Address Cryptocurrency Risks
Cryptocurrency regulation: International Financial Action Task Force urges global action
Hey there! In the world of digital finance, regulations are changing fast - just like the value of your favorite coins! A major player on the global stage, the International Financial Action Task Force (FATF), has issued a stern warning about the risks associated with crypto assets.
In a recent report, the FATF, established in 1989 to protect the global financial system, stresses the need for enhanced regulations and measures against crypto-related illicit activities, focusing on virtual assets and virtual asset service providers (VASPs).
Despite some progress on developing anti-money laundering (AML) protocols, the FATF reveals that overseas providers still present significant challenges. Jurisdictions continue to struggle with identifying all parties involved in virtual asset services, hindering complete compliance.
The FATF emphasizes that VASPs overall have made strides in licensing and registration, but more work is needed to address offshore providers and improve jurisdictions' abilities to mitigate their risks.
More than half of the surveyed jurisdictions, or 85 out of 138, have passed laws to implement the Travel Rule, a regulatory measure aimed at enhancing the transparency of cross-border crypto transfers. The FATF encourages jurisdictions who have not yet introduced legislation to act quickly, while reminding those who have to operationalize and enforce the rule effectively.
Furthermore, the FATF highlights the need for better international cooperation, citing a significant crypto theft from Bybit, a virtual asset service provider, as a recent reminder of the vulnerabilities in existing frameworks.
Stablecoins, digital assets designed to have a stable value relative to a fiat currency or other assets, have become a major concern. Criminal groups are increasingly leveraging stablecoins to maximize profits and mitigate risk, making mass adoption of these assets without adequate controls a significant threat to global financial security.
In closing, the FATF calls for immediate, coordinated, and strengthened global regulatory action on cryptocurrencies, with a focus on addressing the illicit use of stablecoins and improving enforcement of anti-money laundering and counter-terrorist financing standards.
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Source: Mehron Rokhy, Medium, Midjourney
Investors should be aware of the International Financial Action Task Force's (FATF) focus on enhancing regulations and measures against illicit activities related to cryptocurrency, including altcoins, and virtual asset service providers (VASPs). The FATF encourages jurisdictions to act swiftly in implementing the Travel Rule to ensure transparency in cross-border crypto transfers and emphasizes the need for improved international cooperation to mitigate risks associated with stablecoins and cryptocurrency.
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