Cryptocurrency Exchanges Now Have To Devise A Method For The Secure Transfer Of Information – Technology – UK – Mondaq News Alerts

27 February 2020

Rahman Ravelli Solicitors

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Cryptocurrency exchanges are under pressure from regulators tocreate a secure messaging system to exchange information aboutfinancial transactions and comply with money-laundering rules. Readthe guide: Cryptocurrency Reducing The Risks.

Last year, the money laundering watchdog Financial Action TaskForce (FATF) advised its 37 member jurisdictions around the worldto impose a rule on what it termed "virtual asset serviceproviders". The rule required exchanges to share informationabout the identities of the sender and receiver of transfers over acertain threshold.

This was criticised both because it expected the industry tocreate a new information-sharing infrastructure and becauseexchanges cannot necessarily always tell when a customer is sendingmoney to another exchange. But regardless of the critics, thecrypto industry must devise a system; which could be along similarlines to the SWIFT (Society for Worldwide Interbank FinancialTelecommunication) system used by the world's major financialinstitutions.

At this stage, certain questions still need answers; the mainone being precisely what method should exchanges use to transmitinformation to each other? But there is also the issue ofcompliance with data privacy laws, such as the European Union'sGDPR (General Data Protection Regulation).

This requirement that has been laid on crypto exchanges defeatsthe purpose of why cryptocurrencies were created in the firstinstance. But, despite that, there is a clear and unarguable needfor regulation. Exchanges should have know-your-customer checks inplace for those who use them. The tricky issue that really needs tobe addressed is determining at exactly what point they should theybe allowed to reveal any information about their customers to thirdparties if and when they are required to do so.

The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circumstances.

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Cryptocurrency Exchanges Now Have To Devise A Method For The Secure Transfer Of Information - Technology - UK - Mondaq News Alerts