The WFE has responded to Financial Action Task Force (FATF) recommendations on mitigating risks associated with virtual asset service providers (VASPs).
The WFE believes that, whilst new technologies can bring significant benefits to the industry, stakeholders should be conscious of associated risks. With virtual assets - sometimes referred to as cryptoassets - moving into the mainstream, a balance must be found between fostering those growth opportunities and safeguarding users and investors.
The WFE’s response can be summarised as follows:
- The WFE welcomes the FATF recommendations, which detail implementation requirements for effective regulation and supervision of VASPs, in particular measures on identifying those making and receiving virtual asset payments;
- The WFE is encouraged that the recommendations examine threshold issues such as money laundering and terrorist financing, which can be mitigated via the appropriate application of regulation;
- The WFE welcomes well-designed international efforts to safeguard users of virtual assets, particularly the FATF recommendations which have the effect of bringing VASPs under a regulatory standard similar to that of traditional market infrastructures;
- The WFE believes calling the VASPs (many of whom are cryptocurrency platforms) ‘exchanges’ may lead investors into believing that all such platforms are regulated, or meet the same regulatory standards as traditional exchanges, when this may not be the case; and
- If crypto-platforms are to be referred to as ‘exchanges’, regulatory authorities must ensure these platforms demonstrate to participants and users that they meet the appropriate standards.