Can heightened cryptocurrency regulations be a major threat to smaller exchanges?
The announcement of FATF’s travel Rule in 2019 came as shocking news to the entire crypto community. As crypto-exchanges were required to submit the originator name, account number, physical address, national identity number of the user, unique identity number, and even the date and place of birth, many of them closed operations, refusing to give away the users’ information.
Moreover, it was made mandatory that all countries abide by this rule; countries that deny would make it to the blacklist. We are a month away from the FATF’s review, while many Asian countries like Singapore, South Korea, and Japan have passed the regulations, others are contemplating the implications.
Canada also recently updated the AML rules, and accordingly, crypto firms in the country are expected to report the transactions above 10,000 CAD to Financial Transactions and Reports Analysis Centre of Canada[FINTRAC]. The question here is – ‘How prepared are these crypto firms to comply with these rules?’.
In a recent interview with AMBCrypto, Elsa Madrolle, General Manager International at CoolBitX, a blockchain security company commented on the regulations and the plight of the crypto exchanges in Canada. Madrolle stated,
“The updated Canadian regulations will be enacted in June 2020 is the first step, and it is largely expected that FINTRAC will announce further regulatory developments down the road, and the crypto industry can expect to receive more clarity and definition on how to operate in the future.”
She further shared her thoughts on tightened regulations in Canada and noted that it might result in smaller Canadian exchanges dropping out or be bought out by other leading exchanges which are registered as money services business[MSBs]. “But it does give the FINTRAC complete oversight over all remaining crypto firms,” she noted.
While financial authorities will be able to detect and prevent money laundering activities and other criminal activities involving cryptocurrency using the FATF’s travel rule, the main concern is still not being addressed. The genuine challenge on the table is – Cryptocurrency transactions promise greater levels of privacy, and this is at times the sole reason why many are attracted to the space; they don’t want governments to invade their financial privacy.