Bitcoin withdrawals to private wallets could be banned by FATF proposal

Sandra Loyd

The Financial Action Task Force, GAFI, published a preliminary update on its guidelines related to bitcoin, cryptocurrencies and digital asset service providers. In one of its sections, the entity suggests prohibiting transactions to and from private purses (self-custodians) in the case of peer-to-peer or P2P transactions.

According to the organization that combats money laundering and terrorist financing, countries must understand the “risks” of such operations. In order for States to take actions to “mitigate” P2P operations, the FATF’s suggestion is to limit them.

The guideline textually suggests “to deny the license to providers digital asset service providers (VASP) if they allow transactions to / from non-obligated entities (i.e. private / non-hosted wallets) to accept transactions only from / to other digital asset service providers. ‘

The above suggests that traders could only transact within bitcoin exchanges, for example, or between multiple exchanges. The potential ban would force traders not to withdraw their funds to their private wallets, but to leave them at the exchange houses or move them between them.

In theory, it would not be allowed to send funds from a portfolio of this type to an exchange, this to comply with the so-called “travel rule” . According to the rule, exchanges must exchange information about those users who carry out operations that exceed $ 1,000.

The idea is that VASPs know at all times where the transactions being carried out come from and where they are going. According to the FATF, this dynamic could be hindered with the use of the particular wallets that each user has on their phone, for example.

FATF centralized surveillance of bitcoin

For Scott Grob, director of the Association of Anti-Money Laundering Specialists (ACAMS), the guidelines implemented by the FATF in the past and those it suggests this time are “far from being the complete solution that the industry needs.” According to Grob, this is another attempt by supervisors to “control the issue.”

Quoted by digital means, the director explained that the approach that is trying to implement the group is based on centralized control or surveillance. The purpose of the FATF would be to bring the magnifying glass closer to financial operations on “all parties in a similar way, regardless of technology.”

Scott Grob believes that the FATF proposals would deepen centralized surveillance over bitcoin. Source: ACAMS /

On Twitter user Peter Slagter ( @ pesla ) published that the FATF draft is an ongoing war on cash and privacy. “It was presented as optional, but it is still vicious.”

CriptoNoticias announced three weeks ago that the FATF would present a more rigorous guide for cryptocurrencies and service providers related to bitcoin. This draft is an update of the organization’s guidelines for malicious actors not to launder money or finance terrorism using cryptocurrencies.

The FATF was created in 1989 and is made up of some 40 countries. It has since formulated recommendations and a standard to minimize money laundering and terrorist financing. It does not proclaim laws, but guidelines that each country may or may not adjust to its local laws.

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