Alliance of 18 crypto firms rolls out the industry standard for Travel Rule compliance
The compliance solution is expected to add more participants and grow internationally, according to the announcement.
Coinbase, along with 17 other crypto firms, recently launched a ‘Travel Rule Universal Solution Technology’ (TRUST), a platform that will enable the group of well-established US companies to achieve compliance with anti-money laundering and countering the financing of terrorism (AML/CFT) obligations–announced the largest crypto exchange in the US.
The Financial Action Task Force (FATF) announced it will recommend that member countries apply the longstanding compliance requirement for traditional financial institutions, referred to as the ‘Travel Rule,’ to virtual assets (VAs) and virtual asset service providers (VASPs) back in 2018, released its finalized crypto guidance to the public in October last year.
The infamous rule requires VASPs to identify both the originators and beneficiaries of transactions above a certain threshold and, as such, involves transmitting that information to their VASP counterparties.
Many global regulators adopted FATF’s recommendation that VASPs apply the Travel Rule to any cryptocurrency transaction over 1000 USD/EUR involving another VASP.
“To do this, a leading group of crypto exchanges came together to create a solution in the crypto space, while continuing to protect the security and privacy of our customers’ personal information. This unprecedented effort led to a jointly designed solution, TRUST, which we hope will soon become the industry standard for complying with these requirements,”
Wrote Coinbase in a blog post announcing the industry-driven solution.
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 here👇https://t.co/O48lrQIJrY
— Coinbase (@coinbase) February 16, 2022
According to the announcement, the platform is supposed to enable cryptocurrency exchanges to securely send information legally required by the Travel Rule currently has 18 members: Anchorage, Avanti, BitGo, bitFlyer, Bittrex, BlockFi, Circle, Coinbase, Fidelity Digital Assetsˢᵐ, Gemini, Kraken, Paxos, Robinhood, Standard Custody & Trust, Symbridge, TradeStation, Zero Hash, and Zodia Custody.
In the blog post, Coinbase explained that the main goal in designing TRUST was to:
“achieve top-tier compliance with the Travel Rule, while fully honoring customers’ expectations over how their information is handled.”
The crypto exchange further listed the “important safeguards” that were incorporated in designing TRUST.
These include no central store of personal data, as well as proof of address ownership.
“We never centrally store sensitive customer information where it could be targeted by an attacker or misused by a third party,” wrote Coinbase, explaining that the information is directly sent from one TRUST member to another, and the receiving VASP is required to safeguard it.
The solution also includes a mechanism for the receiving TRUST member to prove that it’s the owner of the beneficiary crypto address before customer information is transmitted–ensuring the right information is sent to the right VASP.
Finally, all TRUST members are required to meet core AML, security, and privacy standards before joining.
Partnering up with Exiger, a global market leader in technology-enabled compliance an risk management solutions, will help TRUST “to meet that bar, and to provide ongoing compliance support.”
According to the announcement, the next stage involves adding new members and expanding internationally.