Several cryptocurrency exchanges in South Korea have mentioned that they’re facing issues renewing their agreements with local banks due to a change of internal policies. According to market insiders, banks are now starting to follow the new FATF guidelines which facilitate much stricter Anti Money Laundering rules for both crypto exchanges as well as other sectors of the financial industry.
The Financial Action Task Force has been a scary watchdog and every local authority approaches with caution when it comes to regulating the crypto industry. FATF has the strongest authority, capable of limiting the financial industry in a single country. It is not surprising that in making any decision, the regulator of each state carefully weighs all the risks.
More than that, FATF also announced that it will examine the actions that countries are taking during the following 12 months, engaging industry to enhance compliance with its standards:
“The FATF will monitor implementation of the new requirements by countries and service providers and conduct a 12-month review in June 2020.”
The aftermath is here already
No matter how user-friendly a company wants its platform to be, if it hurts the reputation, and most importantly revenue, there’s no way they’d stand idly by and let it happen. South Korean banks believe that the new compliance standards do not hurt the profitability of crypto exchanges, nor the essence of blockchain, it’s simply a method to weed out any unlawful activities.
However, there still are problems which couldn’t be immediately solved. As Chainanalysis company reported back in April, for example, exchanges cannot send KYC information to recipient platforms whenever there is a transaction, noting that some recipients do not possess the infrastructure needed. They also noted there is currently no way of telling whether a beneficiary uses a “virtual asset services provider” (VASP) or their own personal wallet.
Fears have been expressed by many representatives of the crypto industry, among whom are official representatives of the exchanges, such as John ROTH from Bittrex and Mary Beth BUCHANAN from Kraken. According to them, the compliance will require a fundamental restructuring of the blockchain technology or the establishment of a global system among more than 200 exchanges in the world. American exchanges are discussing such a system, but so far there is no technological solution that would allow full compliance with FATF rules.
Image courtesy of News.Yahoo