October2019APACCRYPTOCURRENCYREPORTEconomictrends,regulatoryupdates,andblockchainanalysisenhancementsTableofContentsIntroduction:ApplyingGlobalRegulatoryGuidanceinAPACAPACCryptocurrencyEconomicAnalysisJapanRegulatoryClimateRepublicofSouthKoreaRegulatoryClimateFATFRecommendation16andBlockchainAnalysisHowChainalysiscanhelp128910111PROPRIETARYIntroduction:ApplyingGlobalRegulatoryGuidanceinAPACInJune2019,theFinancialActionTaskForce(FATF),theinter-governmentalbodythatsetsglobalstandardsrelatedtoanti-moneylaunderingandcombatingthefinancingofterrorism(AML/CFT),publisheditsmuchanticipatedguidanceonhowits200+memberandobserverstates,includingJapanandtheRepublicofSouthKorea,willhavetostartregulatingvirtualassetmarketsintheirjurisdictions.FATF’sguidancerepresentsthefirstmajorsteptowardglobalregulatoryclarity,andwillhaveamajorimpactonthecryptocurrencyindustry.Theminimumrequirementsitexpectsfromregulatorsfarsurpassescurrenteffortsinmostcountries,andcountrieswillsufferseriouseconomicconsequencesiftheyareevaluatedtobedeficientregardingAML/CFTduringmutualevaluations.Long-term,thisregulatoryguidancewillformalizeAML/CFTbestpracticesandhelpthecryptocurrencyindustrymatureandachievemoremainstreamadoption.Intheshort-term,regulators,financialinstitutions(FIs),andindustryparticipantswillneedtofurtherinvestinmitigatingtheriskofmoneylaunderinginlinewithpreviousrecommendationsforothervaluetransfermechanisms.EachofFATF’smemberandobserverstatesarenowexpectedtoleverageitsguidanceasaframeworkfordevelopingoraugmentingtheirownregulationsfortheirindividualjurisdictionswithinayear.AfterFATF’srevisedmethodologyformutualevaluationsisadopted,countrieswillbeassessedbasedonthenewguidance.Notably,FATF’srecommendation16,whichmirrorsthe“TravelRule”intheU.S.,requiresVirtualAssetServiceProviders(VASPs)tosendoriginatorandbeneficiaryinformationtootherVASPsorfinancialinstitutionswhoarecounterpartiestotransactionsover1000EUR/USD(thethresholdfortheTravelRuleis3000USD).Thispresentsasubstantialtechnicalobstac...
