The Travel Rule is a measure for crypto-asset businesses suggested by the Financial Action Task Force (FATF) that specifies measures for Virtual Asset Service Providers (VASPs), sometimes known as Crypto-Asset Service Providers (CASPs).
Coming as a set of guidelines, the exact implementation of the Travel Rule is not set in stone but broadly speaking it requires VASPs to share certain information about parties involved in transactions of more than a given amount ($1000 or EUR1000) in crypto to another VASP or unhosted wallet i.e. when crypto above a certain threshold is transacted through a crypto service provider or to a private wallet.
Whilst the implementations may differ slightly depending on jurisdiction, with the Travel Rule it is integral that the VASPs involved have applied KYC checks for their customers. When crypto transactions above the specified threshold are conducted, the VASP being used by the sender also has to send a set of data alongside the transfer, although this data is not sent or recorded on the blockchain. The additional data required is given as follows:
When the information is received by the recipient’s VASP, they also have to verify that the information of the recipient is accurate. For unhosted wallets (wallets controlled by individuals not using a crypto service provider for the transaction) in some jurisdictions such as the EU, the sender’s VASP also has to verify that the recipient owns the unhosted wallet. If there is an issue with the verification then the VASP may be required to hold the transaction as ‘pending’ or to return funds to the sender, and to inform the relevant financial authorities.
Given that the specifics of this vary from jurisdiction to jurisdiction, it can be difficult to navigate, particularly with crypto transacting on a global scale; however, the necessity of KYC in all instances is essential. The implementation of regulatory measures has always been inevitable and will protect users as well as encourage the adoption of crypto to a wider audience. For crypto users this means they should be prepared to go through the standard financial industry KYC process when setting up accounts with VASPs, but for VASPs it requires the implementation of KYC checks for those that haven’t yet complied with regulations, and signifies the standard for crypto businesses in the future.
Whilst this may be daunting to navigate and the coming increase in identity verification becoming necessary, Blockpass has been designed to enable the best KYC compliance with the least fuss and cost possible. VASPs can integrate Blockpass for a fast, efficient and seamless KYC solution. With the re-usable nature of Blockpass' solution businesses will find not only a simple and effective KYC solution, but also a large pool of new users ready to onboard if they wish.
On the crypto user side, individuals (particularly those who mourn the loss of pseudo-anonymity with the oncoming regulations) can rest easy in the knowledge that their data is treated with the utmost privacy, and that Blockpass is working hard in conjunction with the Blockpass Identity Lab to implement zero-knowledge proof solutions which will ensure that no personal data needs to be viewed at any point of the KYC process.
Whichever side of the transaction you're on, Blockpass is ready to assist in facilitating the transfer of funds in an effective, fast, efficient and compliant manner and hold data privacy paramount.
The Blockpass platform is fully automated and hosted in the cloud, with no integration or setup fee. Businesses can sign up to the KYC Connect console in a matter of minutes, test out the service, and start conducting identity documents verification, KYC and AML checks. Sign up for FREE at console.blockpass.org.