Regulations are what keep an organisation or a civilisation running. This is why each country or community has its own rules and regulations. It helps to identify the challenges people are going through and possible solutions. In the last few decades, the has been successful economic regulation. Technology has made the world a global village, and economic effects affecting one region have a global effect. The current war between Russia and Ukraine has caused inflation and supply chain issues affecting the entire world.
The Financial Action Task Force
The organisation, Financial Action Task Force, rose to solve these issues and develop regulations to control the world’s economy. The organisation acts as a governing organisation to protect the economy and the world’s financial situation. Initially, the organisation consisted of forty countries and several organisations. Some organisations that were FATF members included the World Bank, the IMF, and the United Nations. The G7 nations oversaw its development in Paris in 1989. Some of the organisation’s main goals included:
- Finding solutions to combat money laundering by criminals and organisations
- The second role was to protect the economy from threats harmful to the international financial system. This is the main reason for this article.
Cryptocurrency as a threat to IFS
However, a threat that has risen recently and might harm the International Financial System is cryptocurrency. Cryptocurrency has been used to decentralise the economy of criminals as a transaction tool. This is why FATF came up with recommendations to their member countries to help regulate cryptocurrency adoption. The recommendations were meant to help guide the world into the cryptocurrency market in a way that does not disrupt or hinder the International Financial System. FATF has surveyed for two years since it offered the recommendations to countries.
The survey was carried out on the two hundred countries that had agreed to implement the recommendations. Of the countries that agreed to do this, only 30% had implemented the required regulations. However, only a third of the countries had implemented the recommended crypto-tracking measures. Thirty-six countries had not started implementing the regulations required in cryptocurrency. The report also gave the cryptocurrency credit for implementing the travel rule the organisation was recommending. Members of TRUST, made up of cryptocurrency organisations, had all implemented the rules.
Consequences of the report
To conclude, the report sheds light on some of the possible implications of the practices.
- The first is that crypto privacy might be ending. With these regulations, cryptocurrency will be trackable. This may happen since countries that do not adopt the recommendations will be on the FATF grey or black list. This limits their international transactions with other countries in the organisation. This forces countries to implement the regulations.
- The second effect is that upcoming cryptocurrency projects may become better and more decentralised. They will have to fully decentralise their systems and tokens to comply with the organisation’s regulations.
