The Global Challenge of Regulating Virtual Assets

The Global Challenge of Regulating Virtual Assets

(Michael Ou)

The convergence of traditional finance and cryptocurrencies was more profound than ever this year. From the maturation of crypto-first digital commerce to MicroStrategy’s big bitcoin buy, it was a year of rampant technological adoption. 

With the professionalization of the crypto industry came regulatory challenges. Evolving sectors such as decentralized finance (DeFi) and peer-to-peer transfers introduced new problems. Though, in the main, despite high-level confusion both private and public sectors progressed in developing regulatory frameworks and solutions that will continue to affect the crypto industry for years. 

One of the most important gauges of the maturation of the global crypto asset sector this year was the Financial Action Task Force’s (FATF) first review of its Recommendation 16, or “Travel Rule” guidance for the crypto asset industry in July. 

After adopting it in June 2019, the FATF conducted a 12-month assessment  of the regulatory progress made to address the Travel Rule by member nations and the private sector, in particular Virtual Asset Service Providers (VASPs) and technical solution providers. The rule requires VASPs, such as crypto exchanges or wallet providers, to collect the names of both transaction senders and receivers as well as the national IDs of the former.

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