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US-based crypto firms join forces for travel rule compliance

Legal

cointelegraph.com 16 February 2022 18:30, UTC
  
Reading time: ~2 m

Many major crypto companies based in the United States have released a solution for the Financial Action Task Force's Travel Rule.

In a Wednesday blog post, crypto services provider Paxos announced the launch of the Travel Rule Universal Solution Technology, or TRUST, with members including Coinbase, BlockFi, Gemini, Kraken, Robinhood, Circle, and Fidelity Digital Asset Services. The endeavor is aimed at ensuring crypto firms are in compliance with the Travel Rule while also proving ownership of recipients’ crypto addresses, meeting security and privacy requirements, and not centrally storing users’ personal data.

The Financial Action Task Force, or FATF, recommended to participating regulators across the global that virtual asset service providers, or VASPs, adopt certain guidelines related to anti-money laundering (AML) and anti-terrorist financing (ATF). The guidelines, which many refer to as the “Travel Rule”, aims to prevent users of crypto firms and exchanges from using digital assets for illicit purposes by recommending they provide details on both the sender and recipient to their counterparts for certain transactions of $1,000 or more.

“We are focused on adding new members, so that TRUST can provide comprehensive compliance across the crypto industry,” said the announcement. “The Travel Rule’s reach is expanding internationally, and so must our solution. We are not just focused on exchanges licensed in the U.S., but are expanding to many other global jurisdictions this year.”

TRUST moves our industry forward.

We're proud to be one of 18 leading U.S. crypto exchanges to participate in TRUST, an industry-led Travel Rule solution.

Learn more herehttps://t.co/O48lrQIJrY

— Coinbase (@coinbase) February 16, 2022

Since its introduction in 2019, the Travel Rule has challenged many crypto firms that may not have had the infrastructure necessary to bring them into compliance with the guidelines. While some companies are tackling the problem on their own or sometimes contracting cybersecurity firms, the TRUST represents a unique collaboration of firms adopting a joint solution to the Travel Rule.

Related: Crypto industry seems willing to adopt FATF travel rule: Survey

Both Binance and Crypto.com have implemented a solution called Traveler from crypto intelligence firm CipherTrace. The company’s chief financial analyst, John Jefferies, said in 2020:

“Travel Rule enforcement is simultaneously the biggest milestone and the biggest setback for crypto. It has and will continue to force a level of maturity that will enable the industry to grow into an institutionally accepted asset class [...] It also presents an existential threat for many exchanges and poses potential privacy issues for users.”

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