November 11, 2021

FATF's Crypto Guidance: What did we learn?

1 hour 1 minute

On October 28, 2021, the Financial Action Task Force (FATF) released its Updated Guidance For A Risk Based Approach For Virtual Assets and Virtual Asset Providers (guidance or final guidance). The guidance hit on some of the hottest topics in crypto including DeFi, NFTs, unhosted wallets, stablecoins and the travel rule.

Here are some takeaways:

When it comes to DeFi, you need to use the functional owner/operator test. FATF is less concerned over the use of the term decentralized to describe your business, but rather is focused on whether or not a project is actually decentralized. Just because something is automated does not mean it is decentralized.

NFTs are not virtual assets if they are tickets or momentos of an event without a secondary market, but if they transfer value, and/or live and move on a trading platform, they could be virtual assets.

VASPs and their regulators may allow for a staged approach when it comes to travel rule implementation, but that staged approach must result in earlier implementation than otherwise would have been the case.

Stablecoin issuers and governance bodies could be VASPs and need to build risk-based compliance in order to mitigate risks that may come with mass adoption.

Next up for FATF? Working with regulators around the globe on implementation of the standards.

Check out TRM's full coverage of FATF's guidance here: https://www.trmlabs.com/post/fatf- provides-final-guidance

Joining TRM Talks to discuss the guidance and get clarification on key issues are the chairs of FATF's Virtual Assets Contact Group (VACG), Habuchi Takahide of Japan's Financial Services Agency and Jon Fishman of the U.S. Treasury.

This podcast is hosted by TRM Labs, a blockchain analytics company. We work with crypto businesses, financial institutions and government agencies to monitor, detect and investigate fraud and financial crime in crypto. Learn more about how we're building a safer financial system for billions of people here: https://www.trmlabs.com/about

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