US crypto giants team up to develop a global solution to fight money laundering
A group of the largest U.S. crypto exchanges and custodians have come together to take on the challenge of bringing crypto assets under anti-money laundering (AML) regulations.
A major hurdle is customer personal data (PII) disclosure when regulated companies move cryptocurrencies. The terms of the Financial Action Task Force (FATF) are referred to as the “Travel Rule”.
The first version of the proposed solution to this problem was developed by a team of engineers from BitGo, Coinbase, Gemini, Kraken and Fidelity, all of whom are members of the US Travel Rule Working Group (USTRWG).
BitGo and Fidelity are also members of the Travel Rule Protocol (TRP), an institutional cryptocurrency group that also includes big banks like ING and Standard Chartered.
The presentation of version 1.0 of the Travel Rule solution was developed by US crypto asset service providers (VASPs), the global AML watchdog, the Financial Action Task Force (FATF). ) has completed an assessment of the advancement of the entire industry in different regions, calling for most countries to be lagging behind in compliance with travel policy.
Chris Metcalfe, technical director at BitGo, said the fruits of USTRWG’s labor are now being used by various VASPs, including 30 members of the working group. Additionally, Gemini’s director Elena Hughes said that through a code-compliant approach, it helps clearly demonstrate Gemini’s ethos in building trust in this ecosystem.
USTRWG is a great example of the crypto industry working together to solve problems and develop an innovative solution to meet regulatory requirements that were not designed for cryptocurrencies.
Metcalfe said the USTRWG expects to begin sending transactions with real customer PII by the end of the fourth quarter, adding that the VASP address validation system has yet to be included in version 1.5 of the solution.
The team is currently solving small parts of the global AML problem, so version 1.5, which will be released later this year, will only support transactions in Bitcoin and Ethereum. Metcalfe shared:
First of all, we decided to limit the scope to Bitcoin and Ethereum only. We will then expand to include ERC-20 tokens and other protocols later.
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