New FATF Guidance Applies Regulatory Standards to Decentralized Exchanges, Defi and NFTs

The 19th. On March 1, the Financial Action Task Force on Money Laundering (FATF) published draft guidance on a risk-based approach to virtual assets. The newly updated guidance now applies the anti-money laundering and know-your-customer rules to stables, decentralized financial assets (defi) and non-interruptible token (NFT) assets.

FATF defines decentralised exchanges as virtual asset service providers

Some time ago, cryptocurrency proponents said that global regulators would likely one day address decentralized finance (defi) and the latest craze around non-disruptive tokens (NFT). The Financial Action Task Force (FATF) has been trying to develop a regulatory standard for cryptocurrency companies called Virtual Asset Service Providers (VASPs) for some time. Things like the FATF travel rule have always been controversial, but regulators in a number of countries have accepted the organization’s guidelines. Gibraltar has recently changed its guidelines to comply with the FATF rules, and South Africa is trying to do the same.

The latest FATF guidance is merely an update of some of its earlier guidance on virtual assets (VAs) and VCPPS. However, the updated version now deals with stablecoins, defi and NFTs, as things like decentralized exchanges (dex) are considered VASPs. The newly revised guide proposes anti-money laundering and know your customer (AML/KYC) rules for the use of dex applications. The FATF calls these platforms decentralised or distributed applications (dapp) or platforms offering exchange or transmission services.

For example, the dapp is a term for a program that runs on a P2P network of computers running on a blockchain protocol, a kind of distributed public ledger that can be used to develop other applications, according to the latest guidance. These applications or platforms often run on a distributed ledger, but still have a central part with some degree of involvement, for example. B. creating and operating an asset, setting parameters, holding a management key, or collecting fees.

The regulator’s global guide adds:

Dapps can facilitate or effect the exchange or transfer of [virtual goods].

The FATF is no stranger to defi, dex and NFTs

The most recent FATF guidance essentially defines a non-distortion token (NFT) as a VA because it determines stability. The latest guidance on NFT, Defi and Stemcoin shows that the FATF has noticed these new trends in the crypto space. The FATF also tweeted about the guidelines and asked for comments on the 99-page report. The FATF is seeking your views on the draft guidelines for a risk-based approach to virtual assets and virtual asset providers, the organisation said in a tweet. Private sector stakeholders can participate in public consultations.

The report also addresses transfers from VA portfolios to and from non-exposed portfolios. The FATF recognizes that, unlike traditional remittances, not all remittances under AOS can involve two debtors (or be accounted for by two debtors) according to FATF guidelines. If a VA transfer involves only one obligor on either side of the transfer (e.g., B., when the ordering PSPA or other obligor institution forwards the VA on behalf of its client, the ordering institution, to a beneficiary who is not a client of the ordering institution but is an individual user of the VA receiving the VA transfer).

Of course, discussions about the new FATF definitions for Defi, NFT, stablecoins, Dapps and Dex apps have been a hot topic on social media. The FATF is no stranger to Defi, Dex and the NFT, tweeted Björn Godenrath. Classification as a provider of virtual assets brings market players within the scope of traditional money laundering regulations (if they can be identified), he added.

What do you think of the FATF guidelines and definitions regarding the defi and FTT? Let us know what you think in the comments below.

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The Big Bitcoin Heist, 99-page report, AML, bitcoin, Björn Godenrath, decentralized exchange, DeFi, DEX, fatf, FATF guidelines, Financial Action Task Force, KYC, nft, regulations, regulatory standards, FATF, VA, vasp, VASP

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