G20 agreed on regulating crypto-assets according to FATF’s KYC/AML standards.

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1st of December 2018 G20 had another meeting in Arginetina, Buenos Aires. There have been several issues that were agreed upon in a joint declaration and one of the points of declaration included consensus on dealing with crypto-assets.


Probably the most interesting point in the list, specially for those who are looking to use crypto-assets or diversify their wealth into these, talked about an agreement on the need for the finalization of regulations surrounding cryptocurrencies and relevant technologies. The section pin-pointed the need for an open and resilient financial system, but only one that meets agreed international standards.


“We look forward to continued progress on achieving resilient non-bank financial intermediation. We will step up efforts to ensure that the potential benefits of technology in the financial sector can be realized while risks are mitigated.” – G20 statement found in the original report.


First and foremost the G20 agreed on regulating crypto-assets for anti-money laundering (AML) and countering the financing of terrorism according to the Financial Action Task Force (FATF) standards, which is an inter-governmental body established in 1989 by the member states.


The progress mentioned here is already showing globally with every business that is dealing with crypto-assets as most exchanges and crypto handling services already implemented very strict Know-Your-Customer (KYC) and AML measures to identify their customers. Several major exchanges have already went forward with their regulatory compliant customer monitoring measures.


The latest one to implement such a solution was Binance, the frequently number one exchange by daily volumes, which announced a partnership with Chainalysis to provide its KYC compliance software to monitor asset transactions in real time.


There are some outliers in the crypto-space compared to the pseudonymous Bitcoin and its great number of forks. There are coins such as Monero and Zcash that offer built-in privacy measures to prevent the identification of its users even with tools that Chainalysis offers, but not every one of these alternatives offer cloaked transactions by default.


Coinbase just recently added Zcash as the first privacy focused asset to its exchange portfolio, but not without a twist. Deposits can be made by both transparent and shielded addresses, but the exchange only allows withdrawals to transparent addresses in order to stay compliant to regulations as the movements of these can be verified during the process.


The same can’t be done with Monero as transactions and addresses are private by default, but this also means that the project might have to look for decentralized exchanges and P2P trading in the future in case the government bodies see it as a potential tool for illicit activities.


Bitcoin on the other hand, while having transparent addresses and being subject to such monitoring activities, is being helped out by independent startups such as the recently released Wasabi Wallet. The new wallet allows users who hold their Bitcoin’s in it to make use of a trustless P2P coin shuffling feature that makes it almost impossible for governmental bodies to track the origin of the assets.


Most of the problems come from actually exchanging crypto-assets. Most traders and investors will be subject to these regulations as the easiest way to buy/sell crypto is through exchanges. There are of course various alternatives emerging that allow the bypass of these centralized and regulated platforms.


We gave a short list of alternatives back in April for those who wish to do their trading on trustless and/or fully P2P platforms, these included HodlHodl, Paxful and Bisq. While some of these suffer under problems such as being a bit more technical or low liquidity, we feel that these will be sorted out as soon as more people migrate towards these options and of course new one will emerge with time as well.


ANDRASB
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