The FATF wants countries to take crypto regulation seriously while mentioning NFT and DeFi

The Financial Action Task Force (FATF) wants to increase the pressure on countries to pass crypto regulations. The agency also mentioned non-fungible tokens (NFTs), decentralized finance (DeFi), peer-to-peer (P2P) transactions, and stablecoins for the first time.

The FATF wants countries to take crypto regulation seriously and also mention NFT and DeFi

The FATF, the policy and advisory body to the G7 governments, the Organization for Economic Co-operation and Development, and other multinational anti-money laundering and terrorist financing organizations, issued a set of guidelines for a landmark guide in 2019, including several crypto-exchange reporting logs – Travel rule. In a document released yesterday, the FATF said it had updated and improved its guidelines to “combine and replace the 2019 guidelines”.

And while the agency reiterated its commitment to the travel rule and issued a warning, it claimed that it detected a “lack of enforcement of the travel rule by the jurisdictions”. It says: “Act as [a] discourage the private sector from investing in travel rule solutions. “

It advises companies to proactively adhere to it by writing:

“Regardless of the lack of regulation in the beneficiary’s jurisdiction, original legal entities can contractually or commercially require the beneficiary to comply with the travel regulations.”

In addition, the FATF has added more detail to its definitions of “virtual assets” and virtual asset service providers (VASPs) and warns: “There should be no circumstances where the financial asset in question is not mentioned in the FATF standards.

FATF Regarding stablecoins

Stablecoins are scrutinized in the document, with the agency essentially concluding that fiat-linked tokens are by definition a cryptocurrency or “financial asset”. It concluded that if tokens are to be considered cryptographic files they should be properly regulated and, if they are to be valued as financial products, they should “be subject to that provision in a similar manner” as any other similarly classified assets. .

Regarding stablecoin miners, it states that “a variety of companies involved in stablecoin agreements can qualify as VASPs”.

FATF talks about defi

On the subject of DeFi, the FATF seems to suggest that many protocols are less “decentralized” than they might claim:

“It seems fairly common for DeFi agreements to refer to themselves as decentralized when they actually include someone with control or sufficient influence, and jurisdictions should adopt the definition of VASP without self-determination. Description”.

Here are some other key takeaways from the updated guide:

A section on NFTs is included, but appears to be a bit tentative, mentioning that some NFTs may qualify as crypto files but concludes that “countries should consider adopting these standards.” FATF for NFT by Case by case.”

DeFi applications are not themselves VASPs, but “creators, owners, and operators, or any other person who retains control or sufficient influence over DeFi agreements” – and may need to apply for an operating license.

With regard to P2P transactions, the organization notes that such transactions can involve cryptocurrency-like “risks” and must be controlled. “While the FATF has not yet seen a clear trend towards increased use of P2P transactions, there is still the potential risk that more virtual asset transactions will move into the P2P arena,” she wrote on FATF standards and VASP regulation and monitoring. “

The FATF does not see industry self-regulators as appropriate enforcement bodies.

The agency also said that more exchanges and collaboration are needed between national VASP regulators.

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