FATF against P2P transactions and privacy providers in crypto

Regulations for cryptocurrencies are getting mainstream worldwide, but some of them might be kind of drastic. That’s proven now by the Financial Action Task Force (FATF), which is developing new policies for the general use of cryptos. Unfortunately, these policies may exclude the use of decentralized wallets, P2P transactions, and privacy solutions.

On a preliminary update by FATF, the Virtual Asset Service Providers (VASPs) should identify every client with personal documents. Besides, they wouldn’t be able to accept deposits or withdraws from or to private wallets, but only from other VASPs following the same KYC rules (Know-Your-Customer).

This would mean a ban for P2P transactions against fiat and even for the very essence of decentralized cryptocurrencies. Of course, only if some governments decide to follow their recommendations by heart.

Additionally, it seems like the FATF’s VASP concept also includes Decentralized Exchanges (DEX) and DeFi applications. So, the users of these kinds of tools would need to register and provide personal information. Privacy technologies like Monero (XMR), Zcash (ZEC), or Lightning Network wouldn’t be viable either.

Peter Van Valkenburgh, Research Director at Coin Center, commented about it:

“Those requirements may be reasonable for banks and other financial institutions where most money laundering takes place, but they are absolutely inappropriate for private persons participating in open computer networks. The penalties for non-compliance are extreme and the bulk data collection would destroy personal privacy and constitutional rights against warrantless surveillance.”

At least, the FATF is accepting public comments till April 20th. According to Dave Jevans, CEO of CipherTrace, the final guidelines will be announced in June. It’s worth mentioning that the FATF doesn’t have enforcement or legal power, and the document is only a recommendation for their member nations. These include around 40 countries, mostly from Europe and the Americas.

Decentralized cryptos keep growing

Meanwhile, the total cryptocurrency market capitalization surpassed $2 trillion for the first time, according to CoinGecko. Half of it belongs to Bitcoin (BTC), now at a price of around $59,000 per coin. The second on the list is still Ethereum (ETH), with a market capitalization of over $245b and a new All-Time-High (ATH) of $2,150 per coin.

The new record for Ethereum might have to do something with the last Berlin upgrade. This one is already running in some testnets, and it’ll reach the mainnet around 14 April 2021. The Ethereum Improvement Proposals (EIPs) included, for now, are four: EIP-2565, EIP-2929, EIP-2718, and EIP-2930. The first two will modify the gas prices (generally reducing them), while the others will include new types of transactions.

The DeFi market also has some new records. The total value locked ascends to $51.5 for the first time [DeFi Pulse], while the market capitalization is now over $107b [CoinGecko]. Compound, Maker, and Aave are leading the way in value locked, but Uniswap, Chainlink, and Terra win per market capitalization.

Featured Image by PDPics / Pixabay

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Originally published at https://blog.alfa.cash on April 5, 2021.

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