Cryptocurrency Exchanges Are Facing The Biggest Regulatory Hurdle Ever

In the latest cryptocurrency news, we are reporting about many crypto exchanges which are apparently under the radar lately and could be shifting their rules in the near future. It all apparently started with the surge in popularity by Bitcoin and many other altcoins – which triggered the Financial Action Task Force to publish a new note and clarify how the participating nations should oversee virtual assets.

As a spokesperson from the FATF named Alexandra Wijmenga-Daniel said in an email, the new rules will apply to crypto exchanges and businesses working with tokens and cryptocurrencies. These will include custodians and crypto hedge funds, too.

A lot of the action in the altcoin news now depends on how the rules – regarding traditional bank wire transfers – will be interpreted and applied by country-specific regulators. The guidelines will basically require companies such as Coinbase, Kraken as well as the asset manager Fidelity Investments – to collect information about customers initiating transactions of over $1,000 or EUR 1,000 – and details about the recipients of the funds. As the FATF notes, the crypto exchanges need to send the data to the recipient’s service provider along with each transaction.

Even though most of them sound simple, the compliance will be costly and technically difficult, according to John Roth who is the chief compliance and ethics officer at the Seattle-based exchange Bittrex.

“It’s either going to require a complete and fundamental restructuring of blockchain technology, or it’s going to require a global parallel system to be sort of constructed among the 200 or so exchanges in the world,” Roth said. “You can imagine difficulties in trying to build something like that.”

Meanwhile, a many of the best cryptocurrency news sites report that handful of US exchanges are talking on setting up such a system, according to Mary Beth Buchanan who is the general counsel at the San Francisco based exchange Kraken, which has about $195 billion in daily volume.

“Without enhanced technology systems, this is a case of trying to apply 20th-century rules to 21st-century technology,” Buchanan said. “There’s not a technological solution that would allow us to fully comply. We are working with international exchanges to try to come up with a solution.”

Some participants are also positive and looking at the bright side, hoping that a greater oversight could lead to more institutional acceptance of crypto.