Trea­sury Sec­re­tary Janet Yellen clar­i­fied on Tues­day that non-cus­to­di­al ser­vice providers should not be sub­ject to the strin­gent anti-mon­ey-laun­der­ing report­ing rules devel­oped by the inter­gov­ern­men­tal Finan­cial Action Task Force

Fast facts

  • Yellen respond­ed to writ­ten ques­tions from Sen­a­tor Pat Toomey, a rank­ing mem­ber of the Sen­ate Bank­ing Com­mit­tee, before her sched­uled tes­ti­mo­ny before Con­gress Nov. 30 on the effects of Covid-19 on the economy. 
  • In last Octo­ber, the FATF updat­ed its guid­ance that appeared to sub­ject DeFi oper­a­tors to strin­gent anti mon­ey laun­der­ing reg­u­la­tions. This seemed in part to con­tra­dict rules under Fin­CEN, the Finan­cial Crimes Enforce­ment Net­work, a bureau of the U.S. Trea­sury, which, Toomey wrote, “has made clear that min­ers, cer­tain wal­let providers, soft­ware devel­op­ers, and oth­er non-cus­to­di­al ser­vices are not sub­ject to Mon­ey Ser­vice Busi­ness registration.”
  • Yellen explained that the FATF did not intend to reg­u­late enti­ties that “pro­vide only ancil­lary ser­vices or prod­ucts to a vir­tu­al asset network.”