Circle CEO Jeremy Allaire has urged G20 leaders to create globally applicable and agreed-upon rules for cryptocurrency regulation. This comes as the Paris-based Financial Action Task Force (FATF) appears on the brink of creating international standards to fight the use of cryptocurrency in money laundering.
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Circle Wants the Kind of Regulation Others Bemoan
The Goldman Sachs-backed payments company and owner of the Poloniex exchange has come out in favor of tighter and more globally uniform regulations around crypto. Allaire feels regulation would help normalize the industry. Per the CEO in an interview with Reuters in London:
“Ultimately there needs to be normalization at the G20 level of critical crypto-related regulatory matters.”
Poloniex has implemented its own KYC procedures to be compliant with regulations. For most users, it takes the exchange within minutes to verify them, simply from a selfie and the front page of their passport. Having added fiat onramping, Poloniex is required to be compliant with U.S. regulations.
Governments Need More Than FATF Rulings
The FATF has made it clear that it would be seeking multi-jurisdictional support and coordination for the licensing and regulation of crypto exchanges to help prevent money laundering and the financing of terrorism through cryptocurrencies. The body has recently advised that it has made amendments to its standards to incorporate virtual currencies.
Last week, FATF amended its global Standards to address the regulation of virtual assets and prevent their misuse for #moneylaundering and #terroristfinancing
— FATF (@FATFNews) October 22, 2018
The FATF recommendations outline AML and CFT standards. However, a number of stakeholders have asked for more clarity on where cryptocurrencies stood in FATF standards.
The body states that:
“The FATF Recommendations set out comprehensive requirements for combating money laundering and terrorist financing that apply to all forms of financial activity—including those that make use of virtual assets. Given the urgent need for an effective global, risk-based response to the AML/CFT risks associated with virtual asset financial activities, the FATF has adopted changes to the FATF Recommendations and Glossary that clarify how the Recommendations apply in the case of financial activities involving virtual assets.”
Those changes drag in cryptocurrency service providers that include “exchanges, certain types of wallet providers, and providers of financial services for Initial Coin Offerings (ICOs)”.
Circle CEO Allaire Not Satisfied, Wants More
Allaire argues that the rules don’t go far enough, calling on governments to also address ICOs themselves and create rules surrounding market manipulation on exchanges:
“When it comes to token offerings, how should they be treated? Which token offerings are securities, which are not? The trading venues – are they like spot commodity markets that need to have rules in place around market manipulation?”
Such areas would appear to be outside the remit of the FATF, which was established to develop “standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system”.
Allaire is broadly calling on governments–notwithstanding FATF standards–to work toward a more coordinated approach to cryptocurrencies. The variance across jurisdictions over how cryptocurrencies and ICOs are treated could not be wider.
Japan embraces crypto. Europe is largely accepting of crypto but lacks a legislative framework around it. Pakistan, Vietnam, Saudi Arabia, and Bangladesh, among others, have declared bitcoin strictly illegal. This graphic from coin.dance also reveals a number of countries in which it is “alegal/neutral” and “restricted”. (Alegal means “wrong but without specific laws to address it”.)
Have your say. Is the Circle CEO calling for something the cryptocurrency economy needs or wants?
Images via Pixabay
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