This blog post is more generic and aims to share the overall sentiment that the International Monetary Fund and governing countries are currently looking for solutions to address the current cryptocurrency situation.
Nothing should be considered investment or financial advice. Enjoy the ride.
All over the globe the world is learning slowly but surely, cryptocurrencys are not leaving. It seems after 2017 there was a strong shift to take this problem seriously by most of the largest countries and organizations in the world. For instance, the E.U has formed a crypto task force, China has banned crypto trading and ICOs while developing their own stable coin, the U.S has establish a crypto exchange license program and had congressional hearings over the topic, and many similar examples.
The current situation is the ongoing problem with regulating a new emerging market without hindering its growth. Most countries reflect this sentiment, but when we dig down into the dirt of the problem, there is one thing in particular the International Monetary Fund (IMF) is looking to solve.
Crypto Transaction Anonymity
The largest debate still stems from the fact that peer to peer transactions and exchange transactions are practically untraceable throughout the entire space if there is no KYC or AML required. The problem lies in the fact that there is no direct way to regulate a decentralize cryptocurrency. Especially not thousands of them that have hundreds of different origins, coding languages, and large systems of nodes across the globe.
Hence, the IMF has enlisted a task force of their own the Financial Action Task Force (FATF). This task force was created to help solve the problem of tracing transactions and figuring out who was sending what to where. Specifically, this group is working with several countries to develop a set of standards that will give the information needed to track who is on either end of crypto transactions.
Financial Action Task Force Purpose
The FATF has a simple purpose, to track where the money is going. Although, this is easier said then done since there are so many different exchanges, countries, and means of peer to peer exchange. Therefore, they will need data, and lots of it. By partnering with all of the countries that have regulated exchanges and mediums for crypto, they can start to build a huge data base of all the transactions happening through out the market.
Mapping this monster is near impossible, but if they can find anomalies within the data, say hundreds of thousands or millions of dollars (crypto) funneling into specific points of contact, there is a high possibility of them catching criminal activity.
Likewise, there are hot points around the globe where funding entering these spaces will likely be used for terrorism. The IMF or task forces can track these specific wallets pinging from certain nodes or vpns and can monitor them for global safety.
One thing the FATF will not do is directly track volumes on independent transactions. This is relatively smart due to the frequency problem of transactions and ability for notorious people to send smaller transactions to mask the purpose of the trade. It is a much better option to track wallets by usage and map them to identities or locations.
Crypto Markets Take on Regulation
In general, the crypto industry does not like regulation, censorship, or KYC/AML. The whole idea of Bitcoin was to stray away from the need of third party intervention and the big brother effect of governments constantly standing over your shoulder.
Although, there is a clear need for regulation in the space. The difference should be standard regulation over the general landscape of crypto would push adoption where as, constant governance through third party intervention could hinder the market. There is a fine line that the governments need to walk on without disrupting the industry, but more than likely they will choose their agenda over the good of the industry.
Crypto Privacy Importance
The crypto market needs to make a decision over whether anonymity is as important as it used to be. Clearly, now there is not as much of a purpose to remain hidden due to governments more than likely already possessing your data and wallet addresses. Although, there are strong arguments to implement a structure similar to Mimble-Wimble or zk-SNARKs where private transactions can exist.
The main reason these implementations are important is because of censorship. If the governments regain the ability to censor and block any address by controlling the means of exchange or mediums, then we are no different than before. Yes, you can send things peer to peer, but without an exchange to liquidate or system to spend your crypto, it is essentially worthless internet money.
Therefore, there needs to be a larger push for more of these zero-proof implementations on larger chains long-term. Simply, there needs to be governance to a degree, but overall the industry needs to stay independent of the larger network of financial systems and banking agendas. This was Satoshi’s dream and we need to protect it.