Could a Smart Contract Be Programmed to Escrow Funds until Both Parties Have Transmitted Travel Rule Data via a Side-Channel?

Yes, a smart contract could be designed to function as a conditional escrow. It would hold funds for a transaction and only release them upon receiving cryptographic proof, or an oracle's confirmation, that the required Travel Rule data has been exchanged through a designated off-chain or side-channel communication method.

For example, both parties might have to sign a message confirming data receipt and submit this signature to the smart contract. However, this introduces complexity, potential points of failure, and relies on the honesty of the parties' off-chain attestations.