Lynn Johannson, Advisor, Sustainability and ESG
January 4th, 2024
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Updated FATF Virtual Asset and VASP Guidance includes DeFi for crypto service providers
FATF | Oct 28,2021
Paris – 28 October 2021 - The virtual asset sector is fast-moving and technologically dynamic, which means continued monitoring and engagement between the public and private sectors is necessary.
In October 2021, the FATF updated its 2019 Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers (VASPs).2019 Guidance for a Risk-Based Approach for Virtual Assets and Virtual Asset Service Providers (VASPs). This updated Guidance forms part of the FATF’s ongoing monitoring of the virtual assets and VASP sector.
The FATF standards require countries to assess and mitigate their risks associated with virtual asset financial activities and providers; license or register providers and subject them to supervision or monitoring by competent national authorities. VASPs are subject to the same relevant FATF measures that apply to financial institutions. This guidance will help countries and VASPs understand their anti-money laundering and counter-terrorist financing obligations, and effectively implement the FATF’s requirements as they apply to this sector. The guidance provides relevant examples and potential solutions to implementation obstacles.
See: 3 Key Takeaways: FATF’s Latest 12-Month Virtual Assets Review
The 2021 Guidance includes updates focusing on the following six key areas:
- clarification of the definitions of virtual assets and VASPs,
- guidance on how the FATF Standards apply to stablecoins,
- additional guidance on the risks and the tools available to countries to address the money laundering and terrorist financing risks for peer-to-peer transactions,
- updated guidance on the licensing and registration of VASPs,
- additional guidance for the public and private sectors on the implementation of the “travel rule”, and
- Principles of information-sharing and co-operation amongst VASP Supervisors
Continue to the full article --> here
Including comment from related Cointelegraph review:
The authority has provided significant additional guidance regarding the DeFi industry, despite the fact that DeFi applications not considered VASPs under the FATF standards, as the standards “do not apply to underlying software or technology.” However, the updated guidance states that DeFi developers and maintainers can actually be considered as VASPs:
“Creators, owners and operators or some other persons who maintain control or sufficient influence in the DeFi arrangements, even if those arrangements seem decentralized, may fall under the FATF definition of a VASP where they are providing or actively facilitating VASP services.”
Download the 111 page PDF FATF report --> here
xReg Consulting has updated their FATF 12 page PDF Travel Rule Explainer --> here
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