• The Financial Conduct Authority (FCA) has announced that UK crypto businesses must comply with the Travel Rule from September 1.
• The Travel Rule is a FATF recommendation to do with guidelines for Virtual Asset Service Providers (VASPs) to prevent money laundering and terrorist financing.
• Critics raise concerns about privacy invasion as the increasingly stringent regulatory climate remains a contention within the crypto industry.
Regulatory Net Tightens Around UK Crypto Businesses
The Financial Conduct Authority (FCA) of the United Kingdom has issued a statement informing that all UK crypto businesses must comply with the FATF’s Travel Rule from September 1, 2023. This increasingly stringent regulatory climate is causing controversy within the industry due to concerns about privacy invasion.
What Is The FATF Travel Rule?
The Financial Action Task Force (FATF) is an intergovernmental body headquartered in Paris, France, tasked with combating global money laundering and terrorist financing. One of their recommendations is known as “the travel rule” which requires Virtual Asset Service Providers (VASPs) to collect and disclose sender and recipient details of cryptocurrency transfers either during or before any transaction occurs.
UK Firms Must Comply With Travel Rule Overseas As Well
The FCA has stated that it expects all UK firms to implement the same standards in overseas jurisdictions, even if those jurisdictions have not adopted the Travel Rule themselves. Furthermore, if data pertaining to transactions coming from non-Travel Rule jurisdictions are missing or incomplete, then firms may consider not releasing funds to such recipients at their discretion.
Opposition To The Travel Rule
In 2021 Coin Center’s Director of Research Peter Van Valkenburgh critcised a draft guidance document published by the FATF calling its approach undemocratic and amounting to warrantless surveillance. Despite this opposition however, jurisdictions remain slow off the mark in adopting these compliance measures leading some analysts to believe that further tightening of regulations may be on its way soon.
Overall it appears that tighter controls over crypto transactions may be necessary in order to protect users from fraud while still allowing them reasonable levels of privacy protection – but only time will tell how exactly these regulations will shape up in practice going forward into 2024 and beyond!