Several US-based crypto firms joined forces to create a Travel rule for the Financial Action Task Force. This news was announced in a blog post on February 16th by Paxon, a crypto service provided. TRUST or the Travel Rule Universal Solution Technology was developed by Coinbase, Kraken, Gemini and BlockFi with two other companies. The goal is to ensure that crypto firms comply with the travel rule. Firms are required to prove every user’s wallet address ownership. They have to meet all privacy and security requirements while ensuring that personal user data is not stored in their database.
The FATF made recommendations to regulators across the globe that VASPs or virtual asset service providers adopt guidelines related to anti-terror financing and anti-money laundering activities. These guidelines are also called the Travel Rule. The goal is to prevent crypto service users from exchanging their assets for illicit transactions. The recommendation is to provide details on both parties – the sender as well as the recipient if the transactions are $1000 or higher.
The focus for these firms is to add more members so that they can enforce the rule compliance across the industry. Since the Travel Rule will be applicable globally, the solution should also do the same. As part of the same announcement, the group emphasized that their focus is not just on US licensed firms but global companies also.
The Rule was introduced in 2018 and quite a few crypto firms found that they didn’t have they necessary infrastructure to comply with the guidelines. Some companies are working on their own to fix this issues and others are reaching out to TRUST and cybersecurity outfits for help.