Intergovernmental organization Financial Action Task Force (FATF) is reportedly preparing to tighten up the rules for cryptocurrency exchanges, according to Reuters, quoting a Japanese official who was familiar with the matter.
At present, cryptocurrency exchanges have been going through a torrid time with a succession of hacks, technical glitches and pump and dump schemes have dealt an almost killing blow to the whole cryptocurrency industry as prices continue to fall to yearly lows. Thousands of investors have lost millions of dollars to hacks, showing how vulnerable the industry is at this nascent stage.
Several top players in the cryptocurrency industry have been clamouring for regulation to be introduced for cryptocurrency exchanges. The new rules would be an upgrade to the non-binding resolutions which were adopted by the FATF way back in 2015. The FATF will be considering existing guidelines on anti-money laundering measures whilst also reporting any suspicious trading activity. These laws can be applied to new exchanges whilst the intergovernmental organization will also reportedly look into working with jurisdictions that have already banned or regulated cryptocurrencies.
Taking the lead on this issue is Japan, which is pushing to promote the new laws by 2019. The official who spoke under condition of anonymity said that Japan hopes to collaborate with the United States as well as other European countries on the issue.
The FATF is based in Paris and is composed of 37 different member states. The intergovernmental organization was founded in 1989 on the G7 initiative to develop policies to combat money laundering, and more recently, terrorism financing.
The recent move by the FATF follows the recent release of a draft on new regulations for crypto exchanges and payment services by the Canadian government, which have caused alarm amongst exchanges who said they will be hampered by these new regulations. The new rules aim to address a “number of deficiencies” that the FATF outlined in 2015, particularly boosting the country’s AML and crime financing prevention measures.