Altcoin News: “The Black Market Phase Is Coming”: The Date of Publication of Instructions on Crypto-Regulation from FATF Is Named

June 12, 2019, by Marko Vidrih on ALTCOIN MAGAZINE

The Financial Action Task Force on Money Laundering (FATF) will on June 21 present a document explaining how its member countries should organize control over the cryptocurrency industry, writes Bloomberg, citing a statement by a representative of the organization.

Previously, participants in the crypto-industry criticized the proposals of FATF for excessive rigor, which, in their opinion, could force full-fledged companies to go underground, and not increase the level of transparency in the market, as the intergovernmental organization expects.

“We are entering the black market phase,” Nick Carter, a partner from Castle Island Ventures, commented on the Bloomberg publication.

In the classification given by Carter, the black market is the second phase — immediately after the agreement period and before the stages of competition and defeat of one of the parties.

Messari’s director of research for the information portal, Eric Turner, called the upcoming regulation “one of the biggest threats to crypto today,” while recognizing that the interpretation of the presented provisions by individual countries will play an important role.

“Their recommendation could have a much larger impact than the SEC or any other regulator has had to date,” he added.

Experts recognize that ensuring compliance with FATF requirements by cryptocurrency companies will require substantial financial and technical resources.

“While that may sound simple, compliance will be costly and technically difficult,” said John Roth, chief compliance and ethics officer at Seattle-based exchange Bittrex, which has about $58 million in daily-trading volume. “After all, wallet addresses on digital ledgers supporting cryptocurrencies are largely anonymous, so an exchange currently has no way of knowing who the recipient of the funds is.” “It’s either going to require a complete and fundamental restructuring of blockchain technology, or it’s going to require a global parallel system to be sort of constructed among the 200 or so exchanges in the world,” Roth said. “You can imagine difficulties in trying to build something like that.”

Some American trading platforms have already begun to discuss the possibility of creating such a system.

“Without enhanced technology systems, this is a case of trying to apply 20th-century rules to 21st-century technology,” said Mary Beth Buchanan, a senior lawyer at the Kraken exchange. “There’s not a technological solution that would allow us to fully comply. We are working with international exchanges to try to come up with a solution.”

“I get why the FATF wants to do this,” Jeff Horowitz, chief compliance officer at San Francisco-based Coinbase, the largest U.S. crypto exchange.

“But applying bank regulations to this industry could drive more people to conduct person-to-person transactions, which would result in less transparency for law enforcement. The FATF really needs to consider the many unintended consequences of applying this specific rule to VASPs.”

Cryptocurrency funds, which will be hampered by new requirements, may be under attack. Delays in trading or additional transaction costs can cause a significant reduction in profits.

At the same time, some believe that the consequence of new requirements will be a wider distribution of cryptocurrency at the institutional level.

“Will it be a potential hardship? Certainly, at least initially,” concluded the head of the politicians of the analytical company Chainalysis, Jesse Spiro. “While it may be a hardship, it seems to be something that’s necessary. The road map at the end of the day after this is less arduous for this industry.”

Author: Marko Vidrih