The UK has just set new rules for crushing money laundering in crypto. The FATF recently put a new “travel rule” in place to deal with worries about crypto scams for UK crypto exchange institutions. This is an institution that often has set international standards. Crypto companies have only a few days to comply with these new rules. Likely crypto banks included. Unfortunately, the implementation leaves something to be desired, meaning it may not be so easy to change things so quickly.
The new rules include requirements to have transactions be transparent, with transactor names included. There have also been attempts to create rules around crypto wallets. Crypto firms thus need to collect information on people who are making transactions abroad. This has posed a serious concern for mainstream crypto firms. They usually uphold anonymity as one of the fundamental pillars of using cryptocurrencies. However, this anonymity can be a double-edged sword and can lead to shady dealings. These new rules may help with crypto scam recovery.
The other main problem is that this rule will be enforced in some areas, but will not be in others. This causes a huge problem for cryptocurrencies, which are international in nature and do not belong to any one jurisdiction. Only 35 jurisdictions have approved of this new law in June. Therefore, it would be difficult for parties in different parts of the world that will have completely different requirements.
These new laws will be active starting on September 1st. Financial groups in the UK have been calling on the FATF to modify their rules to make them easier to follow. Otherwise, the effectiveness of this new legislation might be quite low, and the foundations may start cracking soon. If everyone cannot follow the same new rules at the same time criminal elements can still easily take advantage of crypto financial instruments. Even in some places that have approved of the new rules, they will not come into effect for a year, further the travel rule. We will have to wait and see what this means for and UK crypto exchange firm.
