The Financial Action Task Force (FATF) has released guidance on virtual assets and virtual asset service providers (VASP). But the inclusion of decentralized finance (DeFi) and non-fungible tokens (NFT) have sparked a fresh debate.
Just a week ago, FATF was in the news about announcing finalizing its crypto guidance. But the anti-money laundering watchdog changed its mind. Instead, it released an updated version of the initial guidelines yesterday. The draft called for VASPs (platforms dealing with cryptocurrency) to conform with the standards applied to legacy financial establishments.
Companies that offer services related to stablecoins, blockchain-based decentralized finance (DeFi) apps, and facilitate peer-to-peer (p2p) transactions may have to keep a close watch on their customers’ credentials. And also on funds to avert money laundering and terrorism financing.
In a nutshell, these platforms are required to adhere to all existing rules and conduct thorough anti-money-laundering (AML) and anti-terrorism-financing checks.
More from FATF
Especially for peer-to-peer transactions, FATF stated that countries might enforce practices such as record-keeping or capping transaction limits to only specific approved addresses. It goes like…
“.. countries and VASPs should seek to understand what types of P2P transactions pose a higher or lower risk and understand drivers of P2P transactions and their different risk profiles.”
FATF
According to the published document, the “creators, owners, and operators or any individual who maintain influence in the “DeFi arrangements” may be required to abide by the rules set by the watchdog. On NFTs, the guidance detailed that these tokens are included in the FATF definition of virtual assets (VA). However, regardless of the terminology, FATF rules may still apply to NFTs.
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