In this episode, Sunny Ray talks with Joseph, founder of Shyft Network, about the FATF's newly proposed guidance and what it means for crypto developers, exchanges, and everyday users. Joseph explains why he chose to engage with regulators rather than fight them, tracing the decision back to early struggles getting banking for exchanges in 2014 and 2015. He unpacks how the FATF's guidance could expand enforcement beyond intermediaries to individual developers, DAO organizers, and smart contract builders, potentially restricting peer to peer transfers and withdrawals from exchanges. Joseph also details how Shyft has spent nearly two years building an on chain, decentralized alternative to a SWIFT like system for crypto compliance, one designed to preserve user privacy while satisfying regulatory data sharing needs. He touches on why major exchanges including Binance, Bitfinex, and Tether are partnering with Shyft, and briefly mentions his past advisory work with the OECD. The conversation closes with a call for the crypto community to engage in FATF's public comment period before it closes.
Shyft founder Joseph unpacks FATF's new guidance and why it could put crypto developers, not just exchanges, in regulators' crosshairs.
Why would a crypto project choose to work with regulators instead of resisting them?
Being early in the space, we couldn't get banking or handle taxation properly for the exchanges we were building back in 2014 and 2015. We realized the protocol itself doesn't care about regulation, but we as humans operating within existing systems have to interoperate with them. We decided the only sustainable path was to educate regulators and help define risk together, rather than fight them outright.
Can you break down what this new FATF guidance actually means?
FATF is a standard setting body created after World War II, not a democratic organization, but its member countries represent the world's largest economies. This guidance gives regulators a toolbox to treat crypto like traditional finance when it comes to money laundering and terrorist financing risk. It's proposed guidance right now, meaning countries can choose how aggressively to turn it into actual regulation.
What does this mean for a small business owner trying to start a Bitcoin business?
It's worse than just losing banking access. The guidance opens the door to treating developers as money service businesses subject to enforcement, meaning someone who builds a protocol like Uniswap could be held personally liable for what happens on it. It shifts the target from just companies to individuals, including private key holders and smart contract developers.
Could this lead to blocking withdrawals from centralized exchanges to personal wallets?
Yes, the guidance actually states that countries can restrict withdrawals or deposits in and out of exchanges if they deem it necessary. That means sending funds to a Trezor or a phone wallet could become restricted. Combined with expected KYC requirements across wallets, it points toward eliminating the pseudo anonymity that makes crypto transactions different from the traditional system.
If this feels alarming to the average person, what can they actually do about it?
This is proposed guidance with a public comment period open until April 20th, and many of us in the industry are responding directly to FATF over the next few months. Beyond that, being vocal, staying educated, and responding as an ecosystem matters. This is probably the most important issue the crypto community has had to address in its history.
Why are major exchanges like Binance partnering with Shyft?
We've been solving this compliance problem for almost two years already, since around 2018 and 2019, working with the biggest exchanges in the world. Nobody wants to rebuild something like SWIFT, so we built an on chain, smart contract based system that lets counterparties like exchanges discover each other and share only necessary data, keeping ownership and control with users instead of a central database.
How did you end up becoming an advisor to the OECD?
It started because we were trying to solve our own compliance problems in Canada, then we met people in Australia dealing with the same issue. Regulators genuinely didn't know what to do with businesses like ours, so we ended up working directly with them to help figure it out, which eventually led to broader advisory involvement.
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