FATF AML Regulation: Can the Crypto Industry Adapt to the Travel Rule?

What are the FATF guidelines?In what has now become known as the travel rule, the FATF guidelines require regulators and Virtual Asset Service Providers - namely, exchanges from various countries worldwide - to collect and share personal data during transactions.

Although regulation of cryptocurrency is a hotly debated issue in the crypto community, the FATF guideline amendment proved to be more controversial than usual, as it compels VASPs to share the personal data of their customers.

The FATF has given local authorities and VASPs one year to form an appropriate regulatory framework that complies with the travel rule.

Taylor concluded that Dash will be able to comply with the new regulatory standards, but cryptocurrencies that offer total anonymity might not be able to comply with the data required by the FATF.Travel rule could level the playing field Cryptocurrencies themselves are not the only entities at risk from the travel rule.

According to Roth, the guidelines are only the latest in a long series of recommendations from the FATF:."The new guidance about emerging technology is not a surprise. The industry is currently split between compliant, regulated exchanges and those that are not. Hopefully the attention FATF is giving to the space will force non-compliant exchanges to join the mainstream. Currently, exchanges that chose to bear the costs of compliance, which are considerable, are at a competitive disadvantage in the global marketplace. Uniform rules uniformly enforced will level the playing field."

"No one in the industry is currently compliant with the travel rule, an issue that us and other exchanges are discussing solutions to. The issue here is that a solution would require consensus in the industry and require the use of new and untested solutions to handle the speed and volume of data."

Bitpanda CEO calls for legal clarityBitpanda, a Vienna-based cryptocurrency that launched its global exchange service in June, is also wary of the potential impact the FATF guidelines could have on the industry.

While admitting the investment in securities and crypto assets should be regulated, Demuth said that other restrictions are not conducive to a healthy cryptocurrency sector: "The industry should be heard before setting new rules in place."

The question remains: Regulation on whose terms? Companies and exchanges alike are well known for paying lip service to the need for regulation.

The travel rule from the FATF is a sign that the time has come to establish a boundary between regulation, technology and privacy.