Jenner & Block

Associate E.K. McWilliams Discusses Compliance in the Cryptocurrency Landscape

Jenner & Block Associate E.K. McWilliams is quoted in an article that describes the impact of a new Financial Action Task Force regulation known as the Funds Travel Rule.  To combat money laundering, the Travel Rule requires extensive identifying information about individuals involved in cryptocurrency transactions made between virtual asset service providers, or VASPs, including cryptocurrency exchanges.

McWilliams noted that there is a clear expectation that virtual currency exchanges must comply with the Rule, adding that we may see an uptick in enforcement actions against exchanges who don't comply, "especially when there are other indicia that the exchange is facilitating transactions on the darknet or other money laundering activities."

"It is also important to note that the Funds Travel Rule only applies to transactions from one exchange to another," McWilliams said. "As such, one unintended consequence of the Rule may be to drive people who wish to maintain privacy, for legitimate or illegitimate reasons, to peer-to-peer exchanges and away from regulated exchanges. Peer-to-peer exchanges are decentralized and often lack the accountability, security and transparency measures used by the larger crypto firms."