What Are the Legal and Technical Challenges of Applying the FATF Travel Rule to Peer-to-Peer Stablecoin Transfers?

The primary legal challenge is that the FATF Travel Rule was designed for transactions between Virtual Asset Service Providers (VASPs), not unhosted wallets in peer-to-peer transfers. There is no intermediary to collect and transmit the required originator and beneficiary information.

Technically, public blockchains do not have native protocols for securely transmitting this sensitive PII alongside transactions. Implementing a solution would require new standards or side-channel communication systems, which could compromise privacy, add complexity, and may not be universally adopted across the decentralized ecosystem.