Coming after a previous alert that cryptocurrencies have an inclination towards crimes such as money laundering, FAFT (Financial Action Task Force) is narrowing its take specifically on Stablecoins this time again. FAFT in a recent release said it seeks to address every issue that may be raised with the usage of Stablecoins.
Many believe it is in response to the most debated Stablecoin ever yet recorded in history, the Libra. Facebook’s Stablecoin Libra has met different reactions from various concerns. Major financial players like JPMorgan Chase have already declined support for it, also payment systems such as Visa, PayPal too.
The president of FAFT, Xiangmin Liu while commending the fact that Stablecoins may cause a massive crypto adoption, recall Facebook has more than 2 billion users worldwide so Libra may result in worldwide crypto adoption, but there is a tendency towards crime stated the top executive.
Stablecoins May Eliminate Security Checks
Explaining how Stablecoins could lead to more crime, he enunciated the fact that with how Stablecoins operate, brokers and the third party will be eliminated from the chain. These third-party agents have served as regulatory checks in the past. The verification is carried out on transactions by these agents that have helped in reducing crime.
They have also helped in suspicious activity reporting (SAR) so far.
Recall SEC and other regulatory bodies issued a joint statement on cryptocurrency to tackle money laundering and terrorist financing, this is believed to be a response to Libra. FAFT’s chief believes Stablecoins could pose risks such as money laundering and terrorist financing.
Facebook believes that Libra may cause accessibility of financial services in third world countries by the ease and speed it will offer. Its benefits are yet to be seen by all as in a recent release by G7 nations calling for the initiative to be suspended until the issues raised such as regulatory concerns are resolved.
Earlier this year, FAFT had compelled all cryptocurrency exchanges which classify as VASPs (virtual asset service providers) to reveal customer identity in inter transactions. This was captured in its “travel rule’’ a binding agreement amongst the 37 countries it regulates. The customer identity required by the FAFT will be provided in the digital fingerprints of such customers.
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