A recent news report revealed that the government of Peru had tightened its cryptocurrency regulations and warned crypto exchanges and projects to abide by and obey all anti-money laundering (AML) rules or face severe penalties.
According to the report, in order to address the recently rampant terrorist financing and money laundering issues related to crypto, the Peruvian government has made new decrees concerning the regulation of crypto. The decree reportedly ordered all crypto exchanges in the country to obey the AML rules.
In addition, the new decree designates a vital step in the effort of the government in Peru to regulate the digital assets industry and also protect its financial economy from fraudulent activities.
Furthermore, the decree mandates all entities, individuals, and firms that offer digital asset-related services in Peru to formally report data concerning their operations and transactions to the UIF-Peru ( the Financial Intelligence Unit). The UIF-Peru is in charge of collecting, evaluating, and sending information to discover any terrorism financing or money laundering activities.
For context, Virtual asset service providers are firms and platforms that offer different activities that are related to cryptocurrencies, like, exchanging digital assets with traditional or fiat currency, swapping one crypto asset for the other, sending and receiving crypto assets, offering digital assets custody and management of cryptocurrency portfolio, etc.
Peru Aims To Provide Crypto Regulatory Clarity
In addition, one of the primary goals of the new decree, according to the report, is to make sure that crypto exchanges in the country comply with the laws the (FATF) Financial Action Task Force recommended.
The travel rule recommended by the FAFT is emphasized explicitly in the decree of the Peruvian government. According to the law, exchanges are mandated to enforce the Know Your Customer protocols on their customers. With the aid of the rule, exchanges would collect and share customers’ data to improve transparency and mitigate fraudulent activities in the crypto space.
Furthermore, the report showed that the country is already implementing the decree, and the UIF-Peru is working on more rules which would be implemented in the crypto ecosystem to minimize the rate of terrorism financing and money laundering activities in the country’s crypto market.
The anticipated regulations are expected to put more clarity into the duties and mandates of the crypto assets services providers that offer their services in the Peruvian region.
However, even though the government aimed to use the decree to address the risks involved in crypto investments, many spectators are still skeptical about the rules. A prominent entity among the critics, according to the report, was the Peruvian Blockchain & DLT Association.
Crypto Community Criticize Government’s Decree
ABPE is a network of crypto experts and enthusiasts that advocate for the widespread adoption of crypto assets and blockchain tech. The group reportedly expressed dissatisfaction over the decree stating that the government drafted the regulation without consulting the broader community of the country.
Consequently, the ABPE encourages the congress to begin a discussion with delegates from the crypto industry to make sure that all views and opinions are thoroughly evaluated in the process of regulating the crypto industry.
As the world continues to marvel at the vast potential and utility cases that crypto innovation provides, many nations are still trying to tame and contain the risks and challenges associated with the fast-growing industry.
However, dealing with the pseudonymous and decentralized nature of the innovation has proven to be a big deal. The Peruvian government reportedly tightened its crypto rules as it mandated exchanges to start observing the anti-money laundering rule.
This new development revealed the latent global trend as administrations are seeking ways to protect their citizens from cyber thefts and also secure their national financial stability.
However, fingers are still crossed 9n how the new rules would impact the crypto community in Peru and how the institutional investors would react to the call for increased compliance by the government.