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An Update on the Implementation of the New FATF Travel Rule Requirements

In September, we touched on probably one among the most important developments within the crypto community so far – the FATF’s implementation of the new “travel rules” (new requirements for the provisioning of private identifiable information (PII) regarding users involved in crypto transactions totaling quite $1000 USD/EUR located in each of the FATF’s 39 member countries), also as Virtual Asset Service Providers (VASPs - for instance, CoinBase) now being required to store this information on record by the administration. this is often a hot button issue within the crypto realm today, Cryptocurrency Press Release Distribution thanks to the exchange of PII -- not actively available before thanks to technology limitations -- now being harvested and shared between VASPs.

It’s become apparent that a lot of exchanges are now facing serious hurdles in successfully meeting the initial compliance date of June 2020. This has led to some exchanges in member countries already delisting some coins thanks to non-compliance. FinCEN has also been shown to be more of a force because the new regulations begin to require shape, and is quietly pushing harder for compliance with Blockchain Press Release Distribution the new measures in America. One reason for this was the Q3 2019 Anti-Money Laundering (AML) report published by CipherTrace, which disclosed that the U.S. alone now currently processes almost $2 billion in crypto transactions unknowingly per annum. Thus, the implications for concealment within the U.S. banking industry is already huge. Since the blockchain can’t be modified itself without tons of heavy re-engineering, the solutions currently being offered are what as seen as augmented layers, or, in laymen’s terms, “plug-in” solutions -- with all exchanges involved wanting to come to terms on mutual implementation so as for them to be effective.

One possible solution currently within the works is TransactID, developed by NetKi. this is often a current digital currency identification solution that’s actually been around since 2016, but has gone under recent upgrades to further integrate the PII data needed within transactions to foster compliance with the new FATF requirements. Moving forward, each wallet would feature its own trusted connection between it and therefore the TransactID service, which might never be a neighborhood of the particular blockhain itself. The way it works is straightforward in theory: After an initial transfer request is formed (via an external URL rather than a wallet address), the recipient VASP verifies that Bitcoin Press Release Distribution Services the PII data is actually stored on the originating exchange and is accurate via the TransactID protocol. this is often done via a digital certificate sent concerning the wallet initiating the transfer, also as a certificate associated with the initiating VASP. TransactID itself never stores any PII data, but makes sure the VASPs are, that the info is correct, and ready to be accepted. this is often accomplished by utilizing a modified SSL protocol that permits for the transmission of PII data between exchanges, thus providing information needed between the exchanges, meanwhile mitigating security risks. TransactID would also impose minor user fees onto exchanges at around $1 per wallet additionally to other setup and licensing costs, since the protocol itself that it uses is proprietary. 

A newer , open-source, solution designed by CipherTrace in conjunction with Shyft, may be a new protocol called the Travel Rule Information Sharing Architecture, or TRISA. the tactic of action for TRISA may be a bit different. it might utilize a decentralized Certificate Authority (CA) registry, which all VASPs would need to universally comply with use (and would also foster more self-governance within the blockchain). (This doesn’t exist in TransactID’s implementation thanks to the ICO Press Release Distribution service protocol it uses being supported an existing Bitcoin standard, BIP 75 (which NetKi also helped design).) The CA would store public key information from the VASPs, which might then leave communication between one another. it's not known yet if transactions are going to be initiated via a singular URL like with TransactID since the technology is so new – but considering it uses TLS 1.3 (a more current and secure version of SSL), it might be assumed. Furthermore, the PII data transmittal process is somewhat pared down. the info would only be proven to exist by the CA issuing a signature request from the opposite VASP in an exchange, with the hashes of user identities between both VASPs then being swapped. With TRISA being open-source, there are not any initial setup costs involved. during this case, each VASP would be required to require care of all initial implementation and ongoing maintenance themselves. The presumably minor overhead costs that might be incurred would presumably be funded from active user investments.

It’s all tons to digest at now needless to say – but now the race is real between coins and exchanges to form this work, while maintaining the integrity of digital assets and therefore the blockchain itself during the method . Time will soon tell if the wild-west era that crypto seems to be currently reveling in will come to an in depth , with transactions becoming less anonymous thanks to these new measures. 

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* This article was originally published here Press Release Distribution

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