What Is the “Travel Rule” and How Does It Affect Crypto Transfers?
The Travel Rule, mandated by the Financial Action Task Force (FATF), requires financial institutions, including Virtual Asset Service Providers (VASPs) like exchanges, to share identifying information about the originator and beneficiary of a crypto transfer above a certain threshold. This affects transfers by imposing new compliance requirements, making peer-to-peer and unhosted wallet transfers more complex for regulated entities.
Glossar
The Travel Rule
Regulation ⎊ The Travel Rule, established by the Financial Action Task Force (FATF), mandates that financial institutions, including cryptocurrency exchanges and virtual asset service providers (VASPs), transmit specific information about the originator and beneficiary of transactions exceeding a certain monetary threshold.
Virtual Asset Service Providers
Obligation ⎊ Virtual Asset Service Providers are entities, including centralized exchanges and custodians, that provide services related to the exchange, transfer, or custody of digital assets, subjecting them to stringent Anti-Money Laundering and counter-terrorist financing regulations.
Financial Action Task Force
Compliance ⎊ The Financial Action Task Force (FATF) establishes international standards for combating money laundering and terrorist financing, increasingly relevant as cryptocurrency adoption expands and derivatives markets mature.