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FATF Crypto

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FATF Crypto – Now I’ll start by giving credit where credit is due. A lot of the information in this article came from content created by Wesley Thysse, who is the author of the Reddit post, which inspired this article, Wesley Thysse holds a Master’s in management from the University of Greenwich here in London, and is an expert in international taxes and regulations for cryptocurrencies.

In addition to having a tax law firm of his own Wesley is the founder of the decentralized legal system, an organization that seeks to create a comprehensive international legal framework for cryptocurrencies, and decentralized applications without violating Cryptos core values. He’s also the author of a book called The Crypto sovereign, which is meant to be a guide for a quote, decentralized living.

Most of Wesley’s recent work focuses on what the Financial Action Task Force has been saying about cryptocurrency, and I’ll leave links to Wesley’s socials and website if you’re interested in keeping up with his content.

What Is The FATF?

During their annual summit in Paris in 1989, the G7 countries created the Financial Action Task Force, an organization that deals with financial issues. Besides the United States, Canada, Germany, Japan, France, Italy, and the good old UK, the G7 is composed of the following nations.

The FATF was organized in order to combat money laundering in most of the world’s major economies in the early 1970s and is now made up of 40 countries and over 30 international organizations.

Aside from the FATF audit preventing terrorist financing, which has been added to its list of priorities following the 9/11 Twin Tower Attack, the operations of the FBI have grown since then as well.

With the news that Facebook was planning on launching the Libra stable coin in 2018, the FATF adopted a response, open-ended mandate in early 2019. Following massive unrest and conflict in the Middle East in 2011, the FATF added preventing the financing of weapons of mass destruction to this list.

FATF’s website provides the following information. As stated above, the purpose of the mission is to combat any threat to the integrity of global finance. The FATF has constantly kept cryptocurrency as a top priority because the implicit goal is to replace the current financial system.

The FATF’s “Recommendations”

Just a few months after the new mandate, the FATF decreed that all virtual assets service providers or foursomes must collect KYC on all their users, as per the infamous travel. Now for those unfamiliar, the FATF travel rule requires that the sender and recipient in any transaction over a certain amount identified all in the name of anti-money laundering.

The travel rule only applied to banks, until 2019, when the FATF expanded the travel rule to include VASPS Like cryptocurrency exchanges fear to crypto payment gateways, and so on. As part of his decree, the FATF gave one year to all countries and crypto companies to comply with the travel rule.

At the end of 2019 FATF’s former president, Zheng Ming Lu singled out stable coins, as the greatest risk to the financial system because they make it possible to do away with, quote, regulated middlemen.

I also couldn’t help but notice Mr. Lu also seems to have spearheaded the FATF initiative to develop a framework for digital identities in early 2020, which is concerning at all.

In mid, 2020, we saw countries and crypto companies are like slowly comply with the fancy FATF rule by implementing KYC and integrating with crypto transaction tracking firms like chainalysis ciphertrace.

At the end of 2020, the United States Financial Crimes Enforcement Network and the Federal Reserve pushed for the FATF to lower the travel restriction limit amount from $3,000 to just $250.

A FATF official also came out to complain that countries and crypto companies were not complying with the travel law within the designated timeframe. Then came 2021 As you might have guessed, most of the regulatory clampdown we’ve seen in crypto this year on just a continuation of the so-called recommendations made by the FATF, way back in early 2019.

Why Is The FATF So Influential?

In case you’re asking why the FATF’s proposals are so powerful, this is on the grounds that any nations that don’t consent, are put on the FATF greylist Or more terrible, their boycott.

As indicated by Wikipedia, quote, while under worldwide law, the FATF boycott conveyed with no conventional authorization. In actuality, a locale set on the FATF boycott frequently ended up under extreme monetary pressing factor asked shrewdly and others have called attention to, the FATF’s suggestions, along these lines have the ability to supplant any public laws and sabotage the popularity based cycles by which those laws became.

As a matter of first importance FATF’s constituents are selected generally obscure, and furthermore conceded extraordinary advantages on that viviana meeting on strategic intercourse and invulnerabilities passed in 1961. Set forth plainly, they don’t maintain the very principles and guidelines that we do and have obviously been voyaging uninhibitedly. Since this pandemic started in light of the fact that they’re uncommon.

On the off chance that you need more proof of the FATF’s force, look no farther than El Salvador, which is presently under extreme investigation by the very nations and associations that are a piece of the way that the outcomes of El Salvador’s Bitcoin reception could go from being denied credits to losing associations with a large part of the remainder of the worldwide financial framework.

The motivation behind why different nations haven’t been dependent upon similar examination with the ABS travel decide is essentially that their suggestions are not exceptionally clear. That, however they’ve been continually changing those rules to stay aware of the new advances emerging from the crypto area, like DeFi, which is currently additionally on the FATF radar.

The FATF thusly called for remarks about its crypto proposals this February, and it should finish its suggestions dependent on this data, July.

In any case, due to the pandemic FATF individuals as of late casted a ballot to stretch out this cutoff time to October this year. Thus, the mysterious title of Wesley’s post is in our cut digital currency subreddit.

When the FATF suggestions are settled the organized administrative crackdown on crypto will proceed across the globe, and it will probably be substantially more forceful than what it has been as yet. Along these lines, this is the thing that we can expect dependent on the data we have, a second.

What Will Happen In October?

Now for starters cryptocurrencies will not be banned because of the FATF recommendations. They won’t even be banning privacy coins, peer-to-peer transactions mixers, or any other technologies that preserve privacy Instead, the FATF will label all of these things, as well as anything else that does not comply, involves a regulated intermediary as high risk.

This will pressure cryptocurrency exchanges to delist or privacy coins, incentivize them to ask for detailed information for all funds that originate from peer-to-peer transactions, and cause them to refuse deposits for any cryptocurrencies that interacted with a mixing service.

It’s possible that any users engaging in these activities will eventually be banned from virtual asset service provider platforms altogether, given that they will not want to offer services to high-risk users. You might think that this isn’t a big deal because there’s a massive ecosystem of decentralized applications that could replace these regulated intermediaries.

The problem here is that the FATF’s definition of a loss is broad enough to include any cryptocurrency companies, and even individuals, which are actively building dams. This is probably why uni swap Labs has begun delisting tokens from its decentralized exchange interface, and why I deleted the presentation at the theory of community conference, suggests that thinking of implementing KYC for all their users.

What’s worse is that this high regulatory threshold will make it very hard for smaller crypto projects to comply and could even create a barrier, too big for new ones to emerge. naturally, FATF regulations will apply to ICOs as well, and the high-risk investment designation. These will receive means there will be off-limits for retail investors, and only through so-called investors. These, of course, are the high net worth.

individuals who know so much more about crypto than plebs possibly could, and they will be the ones making the 100x returns. Well, when you hold the bat. This will effectively crush all innovation in the crypto space and turn it into a monopolistic industry, the banking sector, some would say, This shift has already begun by virtue of investors.

This is no coincidence as the FATF endgame is to absorb cryptocurrency into existing financial systems and force all individuals and institutions involved to abide by those same rules and regulations. This will effectively destroy the dream of trustless peer-to-peer finance, but it’s going to send select cryptocurrencies, to the moon and beyond that.

Cryptocurrencies Which Could Benefit

Even though everything I just said might make you want to sell your crypto it’s music to the ears of institutions who are itching to get involved or add to their existing crypto investments.

This is because most of the world’s money is tied up in the existing financial system. Investing in cryptocurrency directly is currently a high-risk behavior in the eyes of the FATF by forcing everyone involved in crypto to comply with KYC it suddenly makes cryptocurrency investing a sanctioned cause of action for both public and private institutions, you’ve probably noticed that most legacy players aren’t too interested in decentralization.

But luckily, there is much more to crypto that store of value cryptocurrencies like Bitcoin have a programmatically built-in supply limit, which makes them an optimal inflation hedge smart contract cryptocurrencies.

like Ethereum makes it possible to create programmatically enforced agreements between parties, proof of stake cryptocurrencies like Cardano make it possible to earn reliable passive income while securing the blockchain.

Defi protocols like Avi, make it possible for the free market to set interest rates for lending and borrowing something which is currently being manipulated by central banks in many countries.

Braves’ basic attention token makes it possible to optimize the advertising experience for both companies and consumers, which is another sector that needs serious improvement. And NFT platforms like audience make it possible for artists to make more money streaming music. Others like Axie infinity make it possible to earn money playing video games, and even open the door to new types of in-game economies that extend into the real world.

The list goes on and the value proposals of these projects will only increase as compliance becomes more common, or at least that’s what we’re being told, the largest cryptocurrency projects will probably benefit the most. And I recommend grayscales cryptocurrency trusts, give us a good idea of which specific cryptocurrencies could rally. As a result, you can see a list of all of those over here. Bitcoin Ethereum file coin Cardano, etc.

There are about a dozen other cryptocurrencies that greyscale is hoping to offer trustful, and I suspect these will see similar levels of adoption and protection, by extension, if they managed to make the cut.

How To Prepare

Given That we still have about three months before the FATF, F..k things up. You might be wondering if there’s anything you can do to protect yourself or even resist the regulatory rollout. Well, the first thing I’ll say is that it’s very unlikely that we’ll see any changes happen overnight.

History suggests that the FATF recommendations will take a very long time to implement, much less enforce stable coins will likely be the first to fall as they pose According to the FATF, the greatest threat to the integrity of the existing financial system according to the FATF.

I suspect that the FATF will require all stable coin issuers to enforce KYC for any accounts holding their tokens, and this will be easy to do since most stable coins are centrally controlled tether circle and Paxos all have a history of freezing user accounts, and that means, you probably shouldn’t bank on USDT USDC BUSD or PAXs, to protect your hard-earned crypto gains during the next bear market.

Moreover, you should take some time to analyze the cryptocurrencies you’re holding and ask yourself if any of them are at risk of getting wrecked by regulators.

This could be because the coin or token is too similar to a security, ie, stock in a company, or because the company behind it won’t be able to comply with KYC requirements. This will be the case for many defined projects so pay extra attention to those.

If we do manage to make it up to new all-time highs in the coming months, it might be wise to consider selling any potentially non-compliant Cryptos, or alternatively, you could double down on decentralization and look into cryptocurrency projects that could survive the purge, or provide the necessary infrastructure to exist outside of the system,

peer to peer crypto marketplaces cross-chain decks are algorithmic or synthetic stable coins are a few of the many options you have, unfortunately interacting with these services will likely be easier said than done, as cash is phased out and digital identities are brought in.

If you’ve made some mad cash in crypto or can work remotely, your best bet is to move to countries or jurisdictions, which are lagging behind in crypto compliance. This is not illegal, but it’s what many wealthy individuals and institutions do to avoid excessive taxation,

Even so, it will only be a matter of time before the FATF, recommendations, find their way into every country, so keep that in mind before you pack your bags.

Now, this brings me to the final and perhaps best course of action, and that is to create cryptocurrency technologies that could triumph over this type of tyranny.

There are 1000s of developers who have been doing this since the earliest days of the Internet and Satoshi Nakamoto, was one of them.

He or she created Bitcoin in response to the 2008 financial crisis, with the sole purpose of creating a currency that was free from the centralized corruption that is now creeping into the crypto industry. If the

cryptocurrency industry we see today becomes something unrecognizable. The only solution will be to build a better Bitcoin and try again.

Disclaimer:

Make sure you do the proper research before investing in cryptocurrencies, and you should consult a crypto expert for advice. In the cryptocurrency market, everything can happen because of its volatile nature. It is all a prediction and assumption based on the fact that crypto markets transform over time.

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