SVET Reports
FATF: Travel Rule
I did already addressed this question in this group back in February, when FATF issued its now infamous "Public Statement – Mitigating Risks from Virtual Assets". However, because this dreadful piece continues to trouble so many minds including those of members of our small community I'll be glad to briefly re-visit it again.
What people find particularly nasty in this doc is the paragraph 7 (a) R.16 which says: "Countries should ensure that originating VASPs (virtual asset service providers) obtain and hold required and accurate originator information and required beneficiary information on virtual asset transfers, submit the above information to beneficiary VASPs and counterparts (if any), and make it available on request to appropriate authorities. "
In banking they call it simply the "travel rule" and it's now the cause of major expenses in both of time and money for all financial institutions across the world. Basically, it means that every time somebody transacts with any currency the information about this "somebody" must "travel" with (or in parallel) the transaction itself. It gives authorities the possibility to build a chain of connections towards the very source of money (at least, they're appeared to believe in that).
Obviously, it goes far beyond the traditional "AML/KYC" hassle we all already accustom to. As you know, whether it's traditional UTXO or account/balance models, non has ever come close to include in mempool / blocks any "history". Only way you can "link" transactions is through the hash (or Merkle) tree. Some shady agencies have already built a whole industry around that.
Now, if overzealous EU and US gov bureaucrats (and US is, of course, member of FATF) continue to insist on 7(a) R.16 it leads, imho, to the build-up of the "huge", international "crypto-wall" between "legal" and "legacy" crypto-currencies. The former would be created by corporations based on "libra-calibra" type of "permissioned" protocols and offered by "official", licensed exchanges. The later would continue to exist and flourish in the underground (like cannabis in most US states and other countries). As usual in those cases the exchange rate between those two worlds would be in the hands of black-market brokers.
That's one pessimistic scenario. However, it looks like the global geopolitics now decisively turns to the road, where such level of cooperation between different countries required by R.16 will hardly be possible in the foreseeable future, at least before we see something like "Washington consensus" suddenly rising from ashes. Therefore, we can say that there will be stormy weather, for sure, but sun will continue to shine on us behind those clouds :)
Hope, with that I didn't miss the point of your asking :)