FATF to release regulations on cryptocurrency and to bring in a tracking system.
August 14, 2019 3:02 pm,
Cryptocurrency is the money of the future. There is no doubt about the fact that one day or the other, the entire globe will be functioning with cryptocurrency as its base form of currency. The past few years have shown positive trends in terms of global acceptance and increase in trust and value. The developed nations like the USA and Canada serves as an epitome of examples where cryptocurrency has thrived and flourished. As a step towards legalizing and adopting cryptocurrency as a means of exchange, 15 countries across the globe have decided to develop a crypto transaction tracking system to make the process more transparent and free from fraud.
Crypto Transaction Tracking
The whole system of cryptocurrency exchange is in itself, very safe and secure. As the name itself signifies, cryptocurrency stores its information encrypted and within blocks of the blockchain. Almost all cryptocurrencies function with blockchain as its backbone. Being an open ledger, all the transactions that take place within the platform is visible to every user and is open for validation. Even then, the countries find a need for tracking the transactions, which includes the details of the users to make sure that there are no illegal or unlawful practices going on. Even though the system of blockchain openly shows the details of the transaction, little information is provided on the credentials of the users. The tracking system aims to eliminate this issue. There are many threats and notorious ways to use the cryptocurrency, like funding the terrorists or using the money for illicit activities.
Developing legal measures
By the year 2020, all the regulatory frameworks necessary to carry out the tracking system shall be put in place. Even though there are a large number of countries that allow legal use of cryptocurrency, there is no solid legal framework laid out. This accounts for the lack of transparency in-laws and can lead to a lot of confusion. All the issues are to be sorted out by the end of this year. Again, once the system comes to place, the private sector will be given the authority to look over the functioning of the same. The Financial Action Task Force has released guidelines which clearly state the approach they have taken to deal with the virtual assets and virtual asset services. It lays down the regulatory recommendations that are to be followed by the nations that are to undergo legal changes in the crypto sector. Consider it as establishing universal standards for transactions involving cryptocurrency and laws associated with it. By doing so, a lot of confusion associated with the laws regarding cryptocurrency from one nation to another can be eliminated. Making the rules more transparent leads to an increased trust towards the digital currency and hence, increasing its value.