What Is a “Travel Rule” in the Context of Cryptocurrency Regulation?

The Travel Rule, originally from traditional finance, requires Virtual Asset Service Providers (VASPs) to transmit certain originator and beneficiary information alongside a cryptocurrency transaction. This rule is a key part of global AML efforts, primarily enforced by the FATF.

Its implementation in the crypto space is technically challenging due to the pseudonymous nature of blockchain transactions. It aims to prevent money laundering by ensuring traceability of funds across exchanges.