On Thursday, the Financial Action Task Force (FATF) stated that countries authorizing cryptocurrency need stricter controls for crypto transactions to meet international transparency standards. The France-based watchdog stated that countries had made only “limited progress” in enforcing its “travel rule”, which it had suggested for global adoption in 2015.
Cryptocurrency Firms Need to Verify Identities of People Involved in Crypto Transactions
According to the rule, regulators are supposed to guarantee that cryptocurrency corporations verify the identities of people involved in transactions — identical to the laws that oversee regular banks. The standard is observed as a way to minimize the risk of cryptocurrencies being utilized for money laundering or terrorism financing. Back in March, the FATF monitored 98 jurisdictions and discovered that only 29 had passed travel rule legislation and only 11 had started to implement it.
Cryptocurrencies Tend to Fluctuate Wildly in Respect to Their Value
The report stated the gap in the rules left crypto assets and crypto firms “vulnerable to misuse, and demonstrates the urgent need for jurisdictions to accelerate implementation and enforcement”. Cryptocurrencies are largely unregulated and the value of the major ones tends to fluctuate wildly.
In recent months, the value has plummeted, with as much as two-thirds of the market value of the sector being wiped out. Enthusiasts regard cryptocurrencies and the technology around them as the foundation of a decentralized alternative to the mainstream banking system and argue against any regulation. But national authorities are increasingly leaning towards stiffer rules and consumer protection when conducting crypto transactions, as crypto firms push into the mainstream with high-profile TV advertising and celebrity endorsements.
Read more: PayPal Enables Crypto Transfers to External Wallets
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