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Tether, the operator of one of the most popular stablecoins in the crypto market, has stated that it would begin testing a system that will allow it to comply with the Financial Action Task Force (FATF) travel rule.
Tether will be able to seamlessly exchange trip rule data across Virtual Asset Service Providers, (VASPs) using the system, supplied by Notabene, a firm that provides ID and travels rule compliance solutions.
Compliance Solution for Tether Eyes
Tether, the firm behind the creation of the largest stablecoin by market size in the cryptocurrency market, USDT, will trial a solution that would allow it to comply with the Financial Action Task Force’s (FATF) proposed travel regulation.
This information will be communicated between VASPs using the solution that will be evaluated, offered by Notabene, a software business that provides compliance solutions.
Tether’s efforts are intended to deter bad actors from utilizing USDT to transport cash originating from or going to unlawful sources.
This solution intends to make tether (USDT) more friendly to law enforcement authorities all around the world, as well as safer for users that utilize Tether's stablecoin.
Tether’s CCO, Leonardo Real, stated:
We must work with other large VASPs to build this industry from the ground up. As pioneers of blockchain technology and leaders in transparency, we are dedicated to not only keeping up with new rules but helping shape them.
Travel Rule of the FATF
The FATF’s travel rule, which was proposed to be implemented by VASPs as it is now enforced for traditional financial institutions, states that the information of both parties involved in a transaction must be shared by the institutions facilitating to assist in cases of money laundering or terrorist financing.
However, due to the unknown nature of Bitcoin transactions, implementing this regulation has proved challenging.
As a result, in the crypto realm, ways to comply with the trip regulation may leverage blockchain analytics and other technologies to successfully transmit this data.
Tether is not the only corporation attempting to increase the amount of scrutiny on transactions involving its products. Binance was one of the first exchanges to use a comparable solution, offered by blockchain intelligence firm Ciphertrace, to meet with travel regulation requirements in July.
It intends to incorporate Notabene's technology after successfully testing it to have better monitoring over USDT transactions.
Tether’s transparency website reports that there are about 70,687,988,377 tethers in circulation at the time of writing.