Despite the industry’s recent growth, non-fungible tokens (NFTs) have also been a source of controversy, as they contribute to the rise of illegal activity. As a result, businesses and law-makers around the globe expect to see regulations surrounding NFTs to become stricter, in a fashion similar to how laws have controlled the cryptocurrency industry. 

We will delve deeper into the money laundering crimes processed through or brought on by NFTs and discuss how this may affect the regulations imposed on NFTs.

Definition and Constituents of VASPs

Under the definitions provided by the Financial Action Task Force (FATF), VASPs refer to any business or individual that provides one or more of the following services on behalf of another person or organisation:

  1. Transfer of virtual assets and fiat currency
  2. Transfer virtual assets between one or more forms
  3. Virtual asset transfer
  4. Secured storage and management of virtual assets or tools that allow for virtual asset control
  5. Participation which is inclusive of the provision of financial services in connection with an issuer’s virtual asset offer or sale

Unfortunately, determining which businesses may be categorised as a VASP is challenging. This is because the list is constantly changing and expanding. We may, however, address some of the most common VASPs, which include:

  1. Brokerage and Trading Services: This includes tax consulting, portfolio management, and estate planning
  2. Investment Vehicles: This can range from low risks, such as certificates of deposits (CDs), bonds, to high risks like stocks, options and futures.
  3. Centralised and Decentralised Exchanges: Centralised exchanges, such as Binance, Coinbase or Kraken, rely on private infrastructure to match supply and demand; and are managed internally in their own servers. Decentralised exchanges, such as Uniswap, Tokenlon and Venus, are cryptocurrency exchanges that allow peer-to-peer transactions. 
  4. Cryptocurrency Wallet Providers: A cryptocurrency wallet is a software program that allows you to store, send, and receive digital currencies. Some popular crypto wallet providers include Exodus, TREZOR and ZenGo.
  5. Mining Pools: These are groups of cooperating cryptocurrency miners who agree to share block rewards in proportion to their contributed mining hash power. Examples of mining pools include F2Pool, AntPool and ViaBTC.
  6. Services Powered by Smart Contracts: Smart contracts are programs stored on lines of code that run when predetermined conditions are met. They help to automate the execution of an agreement so it can immediately notify all participants of certain outcomes. Examples of such companies include Unicsoft, Cubix and AspireCrypto.

Travel Rule

In the compliance industry, the FATF establishes rules and norms that govern VASPs. One of the most important laws, for example, is the Travel Rule, which applies to all VASPs. It advises VASPs who conduct cryptocurrency and coin transfers of more than USD1,000 to provide specific identifying information about the recipient. A VASP should know of the risks associated with transferring funds to or from an unhosted wallet and should opt to impose additional restrictions or controls on such transactions.

Regtank complies with rules set by the FATF and other authorities governing the financial world in your local environment. Thus, we can aid you in navigating through it seamlessly. Reach out to us at info@regtank.com to better understand our services today!