Tether to Test Trial Solution for Automatic Compliance with FATF’s Travel Rule 0 128

New French Legislation Targets Anonymous Crypto Accounts

Tether is planning to introduce a solution which will allow it to comply with the travel rule described by FATAF i.e. Financial Action Task Force. For equipping Tether with the capability, the solution will be provided to it by a company called “Notabene” which is in the business of providing such solutions. Once the system is put in place, the travel rule compliance will work automatically for Tether.

Tether is an owner and issuer of one of the largest and leading stablecoin of the digital currency economy namely USDT. Even in terms of its market capital, Tether is in the lead of every stablecoin on earth. However, one of the major concerns of Tether these days is the compliance of travel rule policy described by FATF. So far, Tether has been lacking this policy which may become a problem for Tether in the future. In order address this issue, Tether has come up with a plan which comprises of a solution.

Tether has engaged company which provides such type of solutions namely “Notabene”. It is reported that after working on the design of the project, Notabene has now finished development of the project. The project is now ready for testing and Tether will be doing the test trial of the solution provided by Notabene. Tether is hopeful that by installing the solution, it will be capable of ensuring compliance with FATF’s travel rule. Notabene’s solution will enable Tether to communicate travel rule filtered data with the Virtual Asset Service Providers (VASPs) automatically.

Present actions of Tether prove that Tether wants to oust malicious actor who otherwise misuse USDT to transfer funds of illicit activities. Once the solution is installed, then a friendly business environment for USDT will be created amongst law enforcement agencies of the world. In addition, the users using Tether for the purposes of transaction will be able to enjoy safety of their funds and transactions.

Tether’s CCO, Leonardo Real said that it is essential that Tether will keep on working with global VASPs. The cooperation is necessary for making the industry clean from malicious actors. He also stated that Tether and alike, being the leaders of blockchain, must responsibly play their roles in complying with the travel rule.

The travel rule policy was lately introduced by FATF. Although the policy was applicable upon the orthodox financial sector, yet it wasn’t there in digital assets until now. It was adopted late in digital currency world because there was difficulty in integrating the policy rule.

The travel policy requires recording of end-to-end information relating to any digital currency transfer. For instance, details of sender/receiver as well as the purpose/source of the transaction are required to be recorded under the policy. The policy will ultimately ensure elimination of corruption, money laundering, theft and funding for terrorism.

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IMF Says Russia and Iran May Use Crypto Mining for Monetizing Energy 0 41

The April 2022Global Financial Stability Report of the IMF has highlighted the consequences of the ongoing Russian invasion of Ukraine. The document said that the role of the US dollar was bound to be affected because of the conflict, as it would lead to the introduction of central bank digital currencies (CBDCs) and the global financial system’s resiliency would also be put to a test. The climate transition goals could also be put at risk because of the priorities associated with energy security. Another issue that would have to be dealt with in the coming years by lawmakers is the ‘cryptoization’ which is likely to occur because emerging markets are experiencing a widespread use of crypto.

IMF cited an increase in crypto trading volumes seen after the introduction of sanctions on Russia to back their statement. This included the financial penalties that had been imposed by Western nations on Russia because of its military invasion. The report said that such cross-border transactions were increasing in the long-term, which means that there would be challenges when it comes to imposing sanctions and managing capital flow. The IMF noted that crypto transactions have increased in both Russia and Ukraine because of the capital restrictions that have been imposed.

However, it is important to note that there has been a fall in liquidity in centralized exchanges where the hryvnia and ruble trading pairs are concerned. Therefore, using crypto exchanges for making large transfers has become rather impractical due to reduced liquidity. But, the IMF admitted that users do have the option of evading some measures via the crypto ecosystem because the identity verification requirements are quite lax in this industry. Hence, the international organization said that blocking new deposits of ruble and freezing crypto assets meant that users could have shifted to non-complying or less transparent crypto platforms and service providers.

Experts at IMF believe that both Russia and Iran could circumvent their respective sanctions via crypto mining. The nations could use their energy resources for generating revenue via crypto mining outside of the traditional financial system. Currently, the countries have a limited share of crypto mining activities, but there is a possibility that it could be increased, considering the size of the mining industry. The IMF quoted estimates showing that almost 11% of the mining revenues of bitcoin could have gone to Russia, which was around $1.4 billion per month, while Iran’s share had been 3%.

Bank of England Says Crypto Assets have Financial Stability Risks 0 81

On Thursday, the Financial Policy Committee of the Bank of England disclosed that they are working on developing a regulatory framework for digital assets. The central bank also made a reference to the sanctions that have been imposed because of the war between Russia and Ukraine in the statements. Bureaucrats and financial regulatory authorities all over the world have become increasingly concerned in recent times that Russia could take advantage of crypto assets to bypass the economic sanctions that have been imposed. The press statement of the BOE said that it was unlikely for crypto assets to provide Russia with a feasible way to get around sanctions at a large scale for now, but there was a possibility they could do so.

Therefore, it is a must to ensure that there are effective public policy frameworksthat can accompany innovation in crypto assets for maintaining the integrity and trust in the financial system. The crypto economy has been highly criticized by some members of the Bank of England for quite a while. Last year in mid-November, Andrew Bailey, the Governor of the Bank of England, had expressed his concerns about the adoption of bitcoin as legal tender in El Salvador. Sir Jon Cunliffe, the deputy governor for financial stability for the central bank, said in the following month that prices of crypto assets could drop to zero.

On Thursday, the report of the FPC talked about financial stability. The committee of the central bank noted that the FPC is assessing the risks to the financial system’s stability and it has concluded that these are currently limited. This is because their size remains limited for now and they are not that connected with the wider financial system. However, the FPC said that if they continue to grow at the same pace, and if they become interconnected with the overall financial system, then these crypto assets could pose a risk to the stability of the financial system.

Since the conflict between Russia and Ukraine began, politicians and lawmakers all over the globe have been discussing, developing, or even proposing laws aimed at regulating and researching digital currencies. The FPC’s statements on Thursday show that the BOE wants to classify crypto assets in the same category as it does traditional financial assets. Not only does the FPC plan on developing a regulatory framework that would govern digital assets, it has also mentioned stablecoins.

The FPC said that a major stablecoin that does not have a reliable deposit guarantee could turn out to be a risk to the UK’s financial system. According to the committee, if they introduce a systemic stablecoin, which is backed through a deposit mad with a commercial bank, it would result in significant risks to the stability of the financial system. All of this talk about crypto has been brought forward because of the Russian-Ukraine conflict and the possibility of the former using cryptocurrencies to evade the tough economic sanctions that have been imposed by Western nations due to its actions.

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