Argos attended “Digital Asset Exchange Expo 2019” on September 3rd in Busan, Republic of Korea. It was a great opportunity for regulatory institutions and global reg tech companies to share their thoughts on FATF’s new standards for regulating cryptocurrency. Along with Argos, representatives from Financial Action Task Force (FATF), Singapore Cryptocurrency and Blockchain Industry Association (ACCESS), the Cambridge Centre for Alternative Finance (CCAF) and reg tech companies participated in DAXPO 2019. Let’s take a look at some of the highlights of the event.
Major issues of DAXPO 2019
[Scope of Personal Data Collection Based on the new FATF Recommendations]
Identification information and privacy requirements under anti-money laundering law vary from country to country. It is important to look for ways to comply with privacy laws of certain countries while satiating FATF’s new data acquisition requirements. To satisfy the travel rule and the EU General Data Protection Regulation, verification of information with encrypted data utilizing hash values has been proposed. Industry players are soon to develop KYC and anti-money laundering (AML) ecosystem, in which participating Virtual Asset Service Providers can securely transfer proof of knowledge without disclosing personally identifying information.
[Where Regulations on Virtual Assets Are Headed]
Jong-Goo Yi, chairman of Korea Blockchain Association’s Self-Regulation Committee, pointed out that major regulatory authorities are still lukewarm about regulating virtual assets. He stressed that the role of self-regulatory bodies becomes more important to prevent money laundering in line with the international standards. Lee said financial regulatory authorities have a duty to maintain market soundness and expected to delegate limited regulatory roles to the association. Through the self-regulatory body approved by the regulatory authority, the member companies comply with the standardized anti-money laundering standards.
[Unification of Inter-State Regulations]
Former FATF president Roger Wilkins highlighted the importance of unified inter-state regulations to prevent arbitrage trading abusing regulatory differences. FATF’s goal is to find a way to transparently regulate cryptocurrency transactions before a large black market is created. However, Wilkins acknowledged that it is not easy to have a supervisory device and regulatory infrastructure that oversee global cryptocurrency transactions. Apart from adopting regulations, he expects that unification of each member state’s law will take some time because many countries lack the ability to actually enforce them. He added that industry and governments must closely work together to comply with the FATF standards.
It was valuable to discuss the upcoming regulation of virtual assets. We expect that specific regulatory measures will soon come into sight concerning the scope and level of regulations for VASPs, following the revision of the Special Act is passed.