What Is the Travel Rule and How Does It Apply to Crypto Transactions?

The Travel Rule is a regulation designed by the Financial Action Task Force (FATF) to combat money laundering. It requires financial institutions, including crypto exchanges, to collect and share originator and beneficiary information for transactions above a certain threshold.

When a user sends crypto from one exchange to another, the originating exchange must pass on identifying information about the sender to the receiving exchange. This rule aims to bring more transparency to crypto transactions, making it harder to move illicit funds anonymously between regulated entities.