This unresolved issue creates a cleft between two groups namely market participants and regulators hindering mass adoption of digital ungoverned financing. While the goal of erecting compliant-ready solutions is valiant, the means proposed don’t align either with the community or the vision of the majority of projects themselves. Implementation of supervisory elements, centralized funds tracing heuristics, are derelicts of obsolete governmental overseers trying to impose strict and unnecessary bounds on the financial liberty of individuals. Despite FATF’s persistence on the introduction of custodian compliant protocols by propounding that potential future investors might be: “ [...} disincentivize further investment in the necessary technology solutions and compliance infrastructure”, there is neither proof nor contingency to this statement. Certainly, it is crucial to minimize the frequency of fraudulent, illegal, and suspicious intrusions in the crypto space. However, it necessitates finding an appropriate compromise that is reached inferentially instead of carelessly exposing the whole structural integrity of blockchain to the unneeded and redundant custody. It should, however, be noted that despite the constant demonization of any type of regulatory measures in the crypto community, the majority of regulators and NGOs are in fact against outright discarding P2P exchanges and instead innovate in a way that would ultimately be beneficial in the wide scope and prolific adoption phase.
Instead of FATF attempts to standardize the priority of AML for VASP (virtual asset providers), there is a patent unwillingness and pushback to do so. Blockchain data analysis groups such as Ciphertrace and Chainalysis do have their foot in the door in the provision of data, transactions retracement, and even deanonymization of peer-to-peer interrelations. However, the main contentious point about them is a centralized aspect of the operation and post-factum interception/analysis.