BALI, Indonesia, Nov. 25, 2022 /PRNewswire/ -- In response to a series of unfortunate events rocking the crypto world, a number of Virtual Asset Services Providers (VASPs) have announced specific industry proposals addressed to global regulators, aiming to expand cooperation and enhance dialogue between both sides while enabling improvements to the existing regulatory mechanisms and compliance infrastructure.
20 VASPs made their way to the V20 Summit, a supporting event to the G20 Leaders' Summit, taking place in Bali, Indonesia on November 15-16, 2022. Hosted by the International Digital Exchange Association (IDAXA), in cooperation with Asosiasi Blockchain Indonesia (A-B-I), the summit served as the venue for Industry to interact and exchange with global regulators, led by the Financial Action Task Force (FATF) and the Financial Stability Board (FSB) which were both represented at the highest levels, with FATF President Raja Kumar and FSB Secretary General Dietrich Domanski providing keynote speeches.
Mr. Kumar acknowledged the importance of industry cooperation in addressing financial crimes.
"In essence, it is crucial for the private sector and public sector to work closely together to establish close partnerships and share information and expertise", he said, adding that industry serves as "a key entry point into the financial system that makes [Industry] the gatekeepers, the crucial first line of defense."
For his part, Mr. Domanski pointed out that "Crypto assets and markets provide many of the same economic functions as traditional financial markets. As they do so, they must be subject to effective regulation and oversight commensurate with risk staples". He continued by saying that "an effective regulatory framework must ensure that crypto asset activities posing similar risks to traditional financial activities are subjected to the same regulatory outcomes."
This high-level meeting also received input from the likes of Didid Noordiatmoko, Interim Head of Indonesia's Commodity Futures Trading Authority, Takahide Habuchi, Co-Chair of FATF's Policy Development Group, Sarah Paquet, Director & CEO of The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), Rick McDonell, former FATF Executive Secretary, Stuart Davis EVP and Global Head of Financial Crimes Management of Scotia Bank and The Right Honourable Lord Desai of the UK House of Lords.
After hearing from the regulators and independent experts, the 20 VASPs held closed-door workshops to discuss the many issues raised by the regulators. The VASPs further acknowledged the need for stronger governance frameworks in the industry. The industry-only talks also yielded the following proposals:
- The creation of a mechanism to allow VASPs to discover one another, so as to better manage counterparty risk and enhance compliance requirements
- Harmonizing thresholds for reporting transfers across jurisdictions
- FATF collaboration with the Global Privacy Assembly to enhance understanding of Data Privacy
- For FSB to consider specialized regulation for the industry's unique activities
- A shift to a principles-based risk management approach
- The creation of a working group between Privacy regulators, FATF and the
- International Organization of Security Commissions (IOSCO)
This call to action for more interagency and international dialogue echoes paragraph 50 of the G20 Bali Leaders' Declaration which recognized "the need for the international community to step up its efforts to effectively combat money laundering, terrorism financing, and proliferation financing".
The G20 Leaders further stated "we welcome the initiative by the FATF to promote the implementation of international standards on virtual assets. [...] We encourage all G20 members to strengthen collaboration to adopt and effectively implement the FATF standards".
Asih Karnengsih, Chairwoman of A-B-I, as the co-organizer of the V20 Summit 2022 reckoned "Indonesia, which is in the process of becoming a member of the FATF and already has clear regulations regarding crypto assets, is relevant to actively participate in providing recommendations to the FATF. Through this forum, industry players also play a role and contribute to delivering views regarding proportional regulation for virtual assets globally."
"We are extremely pleased by the commitment shown by both Industry and Regulators to the V20 Summit process. We were pleased to see that close to 60 individual regulators, representing 27 regulatory bodies across 18 countries, also joined us virtually to listen to the V20 proposals. IDAXA is calling on the broader Virtual Assets Service Providers industry to join the effort to ensure continued consumer trust in our institutions.", said Anson Zeall, co-founder of IDAXA, the convenor of the V20.
Asih added, "the V20 Summit will be carried out continuously every year to follow the development of the virtual asset industry. A-B-I is committed to participating in it to continue encouraging this industrial ecosystem's growth".
The V20 Summit is an annual event aligned with the G20 Leaders' Summit and will reconvene in India in 2023 as Indonesia turns over the G20 presidency.