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UK Treasury moves toward implementing FATF's crypto 'travel rule' with public consultation

Legal

www.theblock.co 23 July 2021 15:55, UTC
  
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HM Treasury, the U.K. government's finance ministry, unveiled Thursday a public consultation on, among other subjects, its planned implementation of the Financial Action Task Force (FATF)'s so-called travel rule for cryptocurrency transactions.

On July 22, the Treasury said that the consultation represents a key step toward amending UK regulations covering terrorism financing, money laundering and the transfer of funds. The consultation runs from now until October 14, according to the government's report, eyeing a legislative move in the spring of 2022.

"The government has been kept informed of technological developments, such as the development of common data standards and the progress of a large number of software solutions, and considers that the time is now right to begin planning for the implementation of the travel rule," the consultation report states.

This process includes FATF's recommended rules for crypto transfers, which were debuted in the summer of 2019 and have been the subject of debate and adoption since then. Earlier this week, the European Commission — the executive branch of the European Union — unveiled its own draft legislation for formally adopting the FATF travel rule. 

Notably, HM Treasury said that it has held off on formal adoption "in order to allow compliance solutions to be developed" by crypto firms. The chief UK regulator for crypto firms is the Financial Conduct Authority, which is building a registry of approved companies. So far, just five crypto companies have been approved within this regime.

The report goes on to note:

"The government’s approach to implementation is guided by the principle that the application of [the travel rule] should be consistent across the financial services industry, regardless of the technology being used to facilitate transfers, unless there is a compelling reason to adopt a different approach. The requirements will apply to cryptoasset exchange providers and custodian wallet providers, as defined in The Money Laundering and Terrorist Financing (Amendment) Regulations 2019, which are carrying on business in the UK."

Specific details include applying the de minimis reporting threshold to the British pound.

"The FTR sets the de minimis threshold, below which more limited beneficiary and originator information may be sent with a transfer, at EUR 1,000. The government proposes that the threshold for cryptoasset transfers should be GBP 1,000. It will therefore be necessary for firms to calculate the value in GBP of, for example, a transfer of Bitcoin," the report states.

More information about the consultation can be found in the HM Treasury report. 


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