The Swiss regulator recently updated its crypto laws to fight money laundering in the crypto sector. The regulator lowered the amount that buyers can purchase without having to reveal their identities. With the new laws in place, anonymous crypto purchases will be much harder.
Crypto Law 2020
According to a press release by the Swiss Financial Market Supervisory Authority (FINMA), the amount of crypto one can buy without sending identifying details has been lowered 5000 Swiss Francs to around 1000 Swiss Francs, which is about 1023 USD. The regulators claim this move was necessitated by the increased risk of money laundering as the reason for the move.
This is part of a global effort to prevent digital money laundering using crypto. In the recent past, the anonymity and outright privacy offered by some crypto coins have proven quite attractive from criminals seeking to transfer huge amounts of money around the world.
In 2019, the Financial Action Task Force recommended tough measures for crypto exchanges. The FATF has over 200 members in its membership ranks. Exchanges have to collect identifying details for crypto purchases exceeding $1000.
In January this year, the EU heightened the restrictions on unidentified crypto transactions. This was after the EU passed new AML rules, which forces crypto exchanges to comply with tough KYC rules. The rules are typically used by the banking industry. This move has forced several crypto exchanges to shut down. Alternatively, some have been forced to move to other territories outside of the EU.
Financial Action Task Force Power
If a nation does not comply with the FAFT regulation, it is locked out of the financial sector. This is even though the FATF has no way of enforcing its rules. In essence, its recommendations are not suggestions but strict guidelines that have to be enforced. It is expected that these recommendations will come into law in every nation on earth.
In essence, crypto anonymity is dead. If you trade in the crypto industry via an exchange, you will need to provide your details, just as you would when trading in the traditional financial markets. Even before the recommendations were issued, various authorities globally were working on ways to keep criminals from using crypto.
However, the recent step in efforts to prevent anonymity has caused fear amongst those in the crypto industry. There are already companies in the crypto sector working on solutions to this concern. For instance, Coinfirm is working on a solution that will allow crypto exchanges to adhere to the law while also protecting the privacy of users.
Death of Privacy Coins Next?
Switzerland is a major player in the global financial sector. It is also a leader when it comes to crypto and blockchain technology. For instance, the Facebook Libra project is registered there due to its friendly laws. This latest action is an attempt by the nation to protect its reputation as a center of finance in the world. The authorities plan to hold consultations on the new regulatory measures up to April this year. Movements like.
The topic of privacy coins also tends to surface when movements like these surface in the market. One would argue that moves made by Swiss regulators are put in place due to increasing acceptance. On the flip side, many would argue moves made by the Swiss regulators move the the industry further away from “decentralization and anonymity.” It appears that if crypto ever goes mainstream, regulators will be highly involved. This creates a lot of questions for privacy coins. It’s believed that privacy coins will stick around, but how can they grow in value if their market will be essentially restricted?
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