18 Crypto Firms Including Coinbase Launch 'Travel Rule Universal Technology'
FATF Recommends Guidelines for Virtual Asset Service Providers
The Financial Action Task Force (FATF) suggests participating regulators throughout the world that virtual asset service providers, or VASPs, require adopting certain guidelines concerning anti-money laundering (AML) and anti-terrorist financing (ATF). The guidelines are often referred to as the ‘Travel Rule.’
The Travel Rule aims to prohibit users of crypto businesses and exchanges from utilizing digital assets for illicit purposes by requesting the provision of data by both the sender and receiver for a certain number of transactions made of $1,000 and more.
A variety of solutions have been proposed to accommodate the travel rule requirements within a falsely created crypto space. Prior to its official launch, the TRUST was also commonly known as the U.S. Travel Rule Working Group. Coinbase, alongside Gemini, BitGo, Kraken, Circle, and Fidelity (FDA) provided the primary engineer firepower.
The Travel Rule Members
A number of renowned cryptocurrency firms in the United States of America include Anchorage, Avanti, BitGo, bitFlyer, Bittrex, BlockFi, Circle, Coinbase, Fidelity Digital Assets, Gemini, Kraken, Paxos, Robinhood, Standard Custody & Trust, Symbridge, Tradestation, Zero Hash and Zodia Custody.
These 18 virtual asset service providers (VASPs) are involved in the introduction of the Travel Rule Universal Solution Technology (TRUST). These are the current U.S. TRUST members that have joined forces to bring digital assets on track with global anti-money laundering regulations (AML).
The TRUST platform, on Wednesday, was developed in response to AML data sharing regulations advocated by the Financial Action Task Force (FATF) and mandated by the Financial Crimes Enforcement Network (FCEN).
How Does TRUST Work?
In a recent interview, Elena Hughes - Chief Compliance Officer of Gemini stated that TRUST is built on two components.
“There's the ability to identify who's on the other side of the transfer prior to initiating it. Secondly, there’s no centralized storage of personal data. So we don’t send it via a centralized repository; instead, the information is exchanged on a bilateral basis.”
The objective here is to create an industry standard that adheres to the travel rule. TRUST was designed with the primary purpose of achieving the finest compliance with the Travel Rule all the while satisfying consumers’ expectations regarding how information is handled.
To accomplish the same, three features were incorporated as part of the TRUST solution which includes no central store of personal data, proof of address ownership, and core security & privacy standards. Coinbase adds,
“We require all TRUST members to meet core anti-money laundering, security, and privacy requirements before joining the solution. And we are partnering with Exiger, a global market leader in technology-enabled compliance and risk management solutions, to help us meet that bar, and to provide ongoing compliance support.”
Singapore has been one step ahead by stepping beyond the FATF rule to identify beneficial owners of transactions between VASPs to include private or unhosted wallets as well. With respect to the inclusion of private and unhosted wallets, Hughes said,
“We are working toward ensuring that we have a compliance solution in those other jurisdictions. What it will ultimately look like is going to be a bit of a ‘time will tell.”
In conclusion, the launching of TRUST remarkably demonstrated that top-tier adherence can co-exist with standard industry value i.e., robust protection of consumers’ privacy and security. According to Coinbase, the next 12 months will be dedicated to expanding ‘many other jurisdictions.’