Argos KYC News & Insights

Global Financial Regulators Call for Prompt Adoption of Virtual Asset Regulations

To keep up with the new FATF (Financial Action Task Force) regulatory standards for virtual assets, FATF member states have already begun putting the new standards into law. The new FATF standards compel Virtual Asset Service Providers (VASPs) to conduct KYC and AML screening and follow the Travel Rule related to every virtual asset transaction over 1,000 USD/EUR. Major financial regulators call for institutionalizing virtual assets industry, warning that falling behind other countries in establishing FATF standards-compliant regulation may result in failure to attract virtual asset-related businesses. Let’s take a look at the voices of global financial regulators.



[The International Monetary Fund]

Christine Lagarde, head of the International Monetary Fund and the European Central Bank president nominee, has said to the Economic and Monetary Affairs Committee of the European Parliament that central banks and financial regulators should embrace the technological innovations such as virtual assets and ensure appropriate regulation is in place. She said “in the case of new technologies – including digital currencies – that means being alert to risks in terms of financial stability, privacy or criminal activities, and ensuring appropriate regulation is in place to steer technology towards the public good. But it also means recognizing the wider social benefits from innovation and allowing them space to develop.” Lagarde also promised that she would focus on ensuring that financial institutions adapt to the rapidly changing environment.


[The United States]

Just a month prior to the new FATF standards, the US Treasury’s Financial Crimes Enforcement Network(FinCEN) clarified that all VASPs in the nation are subject to the Bank Secrecy Act (BSA). There has already been a case where FinCEN took down and fined a non-compliant VASP in April. The FinCen guidance provides a clear definition of virtual asset and Anti-Money Laundering obligations for VASPs. Furthermore, the US government has been actively engaged in regulating virtual assets. The US Treasury has recently established the Financial Stability Oversight Council’s working group on virtual assets where major US financial regulators like FinCEN, SEC (Securities and Exchange Commission), OCC (Office of the Comptroller of the Currency) are to combat money laundering risks. 



Switzerland is one of the more forward-leaning countries in adopting a virtual asset regulatory regime. Last month, the Swiss Financial Market Supervisory Authority (FINMA) published a guidance for regulating blockchain-based transactions and related financial service providers. In the guidance, FINMA stated that all VASPs are subject to the existing Swiss Anti-Money Laundering Ordinance and they are equally under FINMA supervision just like other traditional financial institutions. FINMA goes even further, not providing for any exception for payments involving unregulated wallet providers.


[Republic of Korea]

Sungsoo Eun, the newly-appointed South Korean Financial Services Commission chairperson, is in support of a proposed reporting system for cryptocurrency exchanges operating in the nation. Amendment bill on the Act on the Reporting and Use of Financial Transaction Information remains pending at the South Korean National Assembly. This amendment bill includes the introduction of the reporting system for cryptocurrency exchanges required by the new FATF regulations. Expressing his concerns about the adoption of virtual assets by the de facto financial sector, Chairperson Eun also stressed taking a cautious approach as institutionalizing virtual assets may reignite speculations.



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