EU Crypto Businesses Push for FATF Standards

As the world continues to adapt to the presence of cryptocurrencies and other blockchain-based financial developments, regulatory standards and stances still continue to vary across the globe. Some countries and areas are already accepting (El Salvador) or planning to accept (Lugano, Switzerland) bitcoin and other crypto as legal tender, whereas other places, such as China and Egypt, have banned cryptocurrencies altogether - although such positions have changed in the past. Similarly, decentralized finance (DeFi) and other blockchain-based solutions find different standards and requirements in place in different jurisdictions, with various levels of support or acceptance accompanying their development.

Recently the EU has been discussing new crypto regulations and finding vocal resistance from members of the crypto-scene. This month, news agency Reuters published an article revealing that it had seen a letter in which a number of crypto businesses in the European Union advocated for finance ministers to stick to recommendations given by the Financial Action Task Force (FATF) rather than seeking to push beyond such guidelines in a crackdown on the current explosion of DeFi projects. This apparently included requests that crypto businesses not be required to disclose transaction details, DeFi projects not being required to be registered as legal entities, and some stablecoins not being subject to the Markets in Crypto-assets (MiCA) regulation.

Behind the requests are two main concerns. The first of these is that peoples’ details will be exposed - particularly with new rules coming in for tracking and tracing cryptocurrency transactions - continuing a conversation that has been discussed for years now where the ideals of a transparent and immutable blockchain clashes with the idea of data privacy. Beyond this, there is also the concern that introducing more stringent regulatory requirements will stymie the growth and development of crypto projects in the EU.

Whilst these concerns are valid, and the thought of personal information and blockchain-based projects may initially appear problematic, there are ways in which the EU (along with other countries or institutions or businesses) can avoid such issues and ensure both compliance and privacy.

Blockpass’ KYC solutions are designed to emphasize not just regulatory compliance and security but also usability, speed and privacy. The latest development to Blockpass’ product suite is the revolution of On-Chain KYC®, giving the option for businesses using Blockpass to verify that their users have passed the necessary KYC checks without having to collect the KYC data of those users. This development of a ‘zero-knowledge’ product is a step forwards for privacy preservation and still maintains the flexibility of options for companies who can require specific aspects or standards to be checked.

With these solutions, a drive to maintain the highest regulatory standards, and a constant focus on updating and improving products, Blockpass is in a superlative position to support companies - not just in the EU as more stringent measures are sought, but in all jurisdictions as the ever-changing crypto and DeFi spaces develop.

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By Matthew Warner