The financial watchdog keeps an eye on DeFi and NFT

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2021-03-21 22:34:54

The FATF institution is making a careful shift in terms of cryptocurrencies, which seems to agree in the direction of the current NFT.

The financial watchdog keeps an eye on DeFi and NFT
The financial watchdog keeps an eye on DeFi and NFT

Innovative fields in cryptocurrencies such as decentralized finance (DeFi) are on the radar of global regulators, according to draft guidelines released Friday by Financial Task Force. (FAFT), a global anti-money laundering (AML) agency.

In addition to clarifying the wording of trends on decentralized exchanges (DEXs), the mechanisms that power DeFi platforms and applications, FATF also mentions irreplaceable tokens ( NFT) is booming lately.

NFTs and DeFi present challenges for FATF, which are struggling to incorporate anti-money laundering (AML) rules into counterfeit design transactions in the burgeoning crypto industry.

When it comes to DeFi platforms, FATF says their standards may not apply to underlying software or technology, but the entities associated with “DApps”, such as owners or operators can now be considered virtual asset service providers (VASP) – regulators – individuals who own cryptocurrencies must meet the same AML requirements as traditional finance. So that was an obvious problem for DeFi founders, investors and VC companies.

As well as adding more clarity on DeFi, FATF makes a careful term change, seemingly nodding in the direction of the NFT.

Mr. Siân Jones, senior partner of XReg Consulting points out that a specific reference to “replaceable assets” – which has significant implications in the current NFT fever – has been replaced by “assets with convertible and interchangeable ”.

Mr. Jones, the driving force behind the AML data sharing standard, IVMS101, said:

“NFTs can be converted or exchanged for fiat currency or other virtual assets. Some terms that may have been understood by stakeholders in such a way that FATF was not originally intended have been replaced by language that more closely expresses FATF’s intentions. “

In a blog post summarizing the key points of the new guide, the CipherTrace blockchain analysis form concludes that only NFTs that can support money laundering and terrorism financing are “virtual assets” in the eyes of FATF. CipherTrace said:

“Some of the original NFTs that may not constitute VA may in fact be VA because secondary markets allow transfer or exchange of value or facilitate money laundering or terrorism financing.”

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