Breaking: FATF Rules Crypto Exchanges Must Share User Data

Michael LaVere
  • FATF passes controversial mandate requiring cryptocurrency exchanges to share user data. 
  • Decision will ultimately lead to less transparency, says Chainalysis.

A landmark decision was made on June 21 by the intergovernmental Financial Action Task Force (FATF) forcing cryptocurrency exchanges to share user data.

The FATF, which includes 37 member countries, made the ruling as part of a series of recommendations to improve cryptocurrency regulations around the globe. The group cites the necessity to combat money laundering as their primary motivation, although free-market and privacy advocates are pushing back against the controversial decision.

According to the new requirement, all “virtual asset service providers” (VASPs) - including cryptocurrency exchanges - will be required to share customer information when clients move funds between firms.

The proposal, originally made in February, has been made official by the FATF and states businesses must:

obtain and hold required and accurate originator information and required beneficiary information and submit the information to beneficiary institutions...Further, countries should ensure that beneficiary institutions … obtain and hold required (not necessarily accurate) originator information and required and accurate beneficiary information

User Privacy Compromised

The specifics of the proposal require exchanges to share client data, including name, account number, physical address or customer identification (which could include date of birth).

While the FATF claims to be working towards anti-money laundering--lumping crypto in as a “threat of criminal and terrorist misuse of virtual assets"--the decision is a blow for those using cryptocurrency exchanges anonymously and for privacy.

The ruling will necessitate exchanges to extract even more user data to remain in compliance and may create barriers for crypto-asset transfers between platforms.

FATF Ruling Could Lead to Less Transparency

Chainalysis, a leading data anlytics firm, published a report in April claiming that the FATF’s decision would ultimately lead to less transparency:

Forcing onerous investment and friction onto regulated businesses, who are critical allies to law enforcement, could reduce their prevalence, drive activity to decentralized and peer-to-peer exchanges, and lead to de-risking by financial institutions. Such measures would decrease the transparency that is currently available to law enforcement.

The FATF’s decision may lead to greater use of decentralized-exchanges, which can operate in a non-custodial fashion, and therefore not qualify as a VASP, bypassing regulatory hurdles.

The Bitcoin Update: Price Action, Futures, Halving, and Security

Siamak Masnavi

This article provides: an overview of how Bitcoin (BTC) has been doing over the past 24-hour period; a recap of interesting recent news that might have affected its price (or might do so in the future), and useful observations from Crypto Twitter.

Bitcoin Price Action

BTC-USD 24 Hour Chart - 22 Oct 2019.png

According to data from CryptoCompare, as you can see in the above price chart, the Bitcoin price has been mostly hovering in the range $8,150 and $8,300 during the past 24-hour period. 

Crypto analyst/trader Josh Rager says that Bollinger Bands suggest that the next volatile move could come soon:

Bitcoin Futures

Although trading volume in institutional BTC products decreased in September, as described in the recently-released CryptoCompare Exchange Review report for September 2019, "long positions held by institutional accounts at the CME have been rising again in October" according to crypto data analytics startup Skew:

The Next Bitcoin Halving

As you probably know already, once every 210,000 blocks (approximately every four years), there is a Bitcoin halving event (where the block mining reward is halved, such that miners receive 50% less BTC for verifying transactions); these Bitcoin halving events keep on occurring until the maximum supply of 21 million bitcoins has been minted.

Well, the next Bitcoin halving event is estimated to occur around 14 May 2020; this is when the block mining reward will decrease from 12.5 BTC to 6.25 BTC.

Alistair Milne, Co-Founder and Chief Investment Officer (CIO) of cryptocurrency-focused hedge fund Altana Digital Currency Fund (ADCF), tried to explain yesterday via the following what next year's Bitcoin halving will mean to BTC sell-side pressure:

Offline Storage of Private Keys

Yesterday, UK-based firm Sword Ltd announced the official launch of Cryptosteel Capsule, a 100% stainless steel device (shockproof, waterproof, acid-resistant, and fireproof up to 1400C/2500F) for offline storage of valuable data such as private keys and passwords. 

Cryptosteel Capsule Screenshot.png

Cryptosteel Capsule costs between 89 and 329 euros depending on the variant being ordered.

Jameson Lopp, CTO at Casa, received one of these gadgets at last weekend's Lightning Conference in Berlin Germany, and he put it in his carry-on luggage for the flight back home to the U.S.. Unfortunately, airport security officers in Germany were not too impressed:


Featured Image Credit: Photo via Photo of CryptoSteel Capsule Courtesy of Sword Ltd.