The government of Ukraine recently passed an AML law that covers the crypto sector. The new law is based on the guidelines issued by the Financial Action Task Force. This law, which was passed in Ukraine, acknowledges that cryptocurrencies are a store of wealth. The law also recognizes that crypto has the potential to be used by criminals that could include terror financing and money laundering.
To establish this law, The Ukraine is working with Binance, a leading crypto exchange. The Binance exchange has come on board advising on how to formulate regulations for the crypto sector in Ukraine.
Monitoring Crypto Trading
The new law gives Ukrainian authorities the power to monitor crypto trading activities in the nation. For instance, the government will be allowed to collect the public key of individual transactions worth less than 30,000 hryvnia, which is about 1300 USD. If a transaction goes over that, the government will require that the buyer and sender apply for user verification. The sender and receiver will have to provide proof of identity and verify the nature of the business relationship they have.
Binance is working with The Ukraine on Crypto Regulation
Binance recently signed an MoU with the Ministry of Digital Transformation in Ukraine. According to the terms of the MoU, Binance, which is a leading crypto exchange, will work with Ukrainian authorities to regulate crypto in the nation. Ukraine is amongst the top nations in the world working to regulate the crypto sector. It is also one of the few nations in the world trying to make crypto mainstream by providing the sector with full legal recognition.
In September, the Minister for Digital Transformation announced that they were planning to legalize crypto. At the time, the minister said that legalizing crypto was part of the nation’s effort to modernize. He also noted at the time that the government was working to move various public documents onto a distributed ledger run by the government. Besides that, the minister said that people operating in the sector would start paying taxes. With the help of blockchain technology, the government is hoping to simplify how citizens interact with the government.
About the FATF
Ukraine’s new laws are based on guidelines issued by the Financial Action Task Force. This organization draws its membership from 37 nations. Its focus is combating terrorism financing and money laundering. One of its current areas of focus is the crypto sector. As the sector has continued to grow, there are growing fears that it could be used for money laundering and the financing of terror.
One of its guidelines for the crypto sector calls for exchanges to request and store accurate information about senders and receivers of crypto before a transaction is allowed. Some of the information that exchanges must obtain include the name of the sender, account number, the physical address, national ID number, place of, and date of birth. The deadline for the full implementation of FATF rules by crypto exchanges is June 2020.
Privacy Argument
Many cryptocurrency enthusiasts would argue that this movement into AML defeats the purpose of decentralization. Now that entities in Ukraine essentially have control over public keys, one would argue that it defeats the purpose of peer to peer technology. On the other hand, one could argue that movements like these will spark mass adoption. If more transparency is created within the regulatory norm, it increases the chances of scalability. Visionary Financial had published a research piece a while back arguing “whether cryptocurrency wallets should be registered with governments.” As more and more exchanges like Binance step in to aid mass adoption, it’s possible to see more Ukraine like techniques being used on a global scale to create transparency and safety.
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