FATF Plans to Strengthen Global Supervisory Framework for Crypto Exchanges

The Financial Action Task Force (FATF), whose advice is heeded by more than 200 countries, will meet in October to discuss ways to create a stronger global framework for the regulation of cryptocurrencies.

• In a report Tuesday to the G-20 finance ministers and central bank governors, the international financial watchdog said regulators need to cooperate to make measures such as the Travel Rule more effective.
• As such, the organization will work to develop an international framework for authorities to coordinate and share information about virtual asset service providers (VASPs).
• As defined by FATF, a VASP is an open-ended term for crypto exchanges and peer-to-peer services as well as wallet providers and custodians. It can also include any business that trades or transacts in digital assets.
• This would make the global regulation of cryptocurrencies and stablecoins, in particular, more effective, FATF said.
• The end goal would be the framework forming the base of a global network of supervisors for the crypto industry.
• While details are currently sparse, an FATF spokesperson confirmed the watchdog would convene this autumn to discuss how to improve international cooperation.
• FATF is also planning to make available a list of red flags indicating possible criminal activity to regulators at the same time.
• Siân Jones, a senior partner at XReg Consulting, told CoinDesk the framework would help regulators get up to the same speed worldwide.
• The report gives an overview of stablecoins, cryptocurrencies that attempt to offer price stability by being pegged to a reserve currency such as the U.S. dollar. FATF said it will be providing guidance for regulators at some future point.

Also read: Germany Seeks to Expand Digital Efforts at FATF as It Takes On Watchdog’s Presidency

UPDATE (July 7, 16:55 UTC): This article has been updated to include comment from Siân Jones.