G20 finance ministers and central bankers are pushing for wider adoption of regulations that compel cryptocurrency exchanges to disclose user information, following a summit held in Saudi Arabia’s capital Riyadh.
Representatives of financial institutions from the G20 pressed countries that had not already done so to align with the intergovernmental organization’s global cryptocurrency standards, the Financial Action Task Force (FATF).
“We urge countries to implement the recently adopted Financial Action Task Force (FATF) standards on virtual assets and related providers,” according to a joint-communique published after the summit.
FATF’s controversial “travel rule” concluded in the summer requires virtual asset service providers (VASPs), including wallet providers and exchanges, to share user information with each other every time funds are transferred.
Curb Terrorists Money Launderers Activities
The recommendation aims at preventing the use of cryptocurrencies by terrorists and money launderers to bypass existing controls and sanctions. The G20 reaffirmed in June last year it would align with the new rules.
FATF recommendations are non-binding and provide some room for the authorities to interpret new standards into local legislation. But countries that diverge seriously or do not adopt recommendations face blacklisting, potentially cutting them off from crucial investment and global commerce.
Many of the 36 member states of FATF, which include economies of the G20, have already adopted the travel rule. South Korea and Singapore have both passed legislation requiring VASPs to adhere to new anti-money laundering frameworks.
Recognizing the growing need for an effective global remittance solution, the weekend G20 ministers reiterated in statement released last October calling on countries to do more research and risk-assessment on “global stablecoins” before entering mainstream circulation.
The Communique also called for local authorities to assist the Financial Stability Board (FSB), which monitors the vulnerability of the global financial system, in developing new recommendations for global cryptocurrencies regulation.
In a related context, Singapore announced that Payment Services Act has come into force today, which requires all Singapore-based Crypto companies and exchanges to register first and then apply for a license to start its operations within the country.