Japan to implement the FATF crypto travel rules in April 2022. Has requested the country’s crypto exchanges to prepare for it.
The Financial Services Agency (FSA) of Japan will enforce a travel rule pertaining to the crypto industry. The Agency will implement the“crypto travel rule” in April 2022. On one hand, the rule is meant to impose strict travel regulations on the nation’s crypto industry. On the other hand, this rule will help the country deal with money laundering using cryptocurrencies.
Previously, in March this year, the FSA had asked the VASPs to configure their regulations to suit the travel rule. VASPs or Virtual Asset Service Provider Providers are bodies that facilitate the sale and exchange of virtual assets.
Crypto Travel Rule: What it Entails & the Commotion it has Caused
Japan has adopted the travel rule recommended by the FATF. The FATF or the Financial Action Task Force is an international body that keeps a check on money laundering and terror financing. Subsequently, the rule will make sure that individuals or organisations don’t use cryptocurrencies for the aforesaid crimes.
The travel rules are necessary to maintain decorum in crypto transactions. The Japanese VASPs, however, don’t hold the same stance. According to coindesk, the JVCEA (Japan Virtual Currency Exchange Association) is struggling to cope with this announcement.
JVCEA’s vice-chairperson and BITPoint’s president Genki Oda raised concerns about revamping their entire systems. Kraken Japan’s MD Takeshi Chino said that the timeline is too constricted for them.
According to Chino, most exchanges fancy the current solutions proposed by crypto vendors. And though the exchanges have discussed interoperability, a clear-cut solution is nowhere in sight yet.
Chino was apprehensive about the country’s exchanges bearing the compliance burden for all assets. Furthermore, he said that taking into account all virtual assets will be difficult for the member exchanges. And he is not sure whether all exchanges will be able to comply with the new norms.
The travel rule requires the VASPs to send transaction data of senders and receivers to the government. FATF adopted these rule on June 1, 2019.
South Korea’s Financial Services Commission placed safeguards against money-laundering on March 25. The commission set up these safeguards to keep in line with the FATF rule.
TThe South Korean subsidiary of crypto exchange OKEx was unable to cope with these safeguards. Hence, the firm had to shut down its operations in South Korea.
Hence, this adds one more reason to the uneasiness of Japanese crypto exchanges.