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Crypto.com has selected CipherTrace’s advanced enforcement platform to assist it in meeting the nuanced criteria of the FATF’s industry-changing “travel rule.”
Crypto.com, the maker of a cryptocurrency exchange, wallet, debit card service, and cryptocurrency app, is beefing up the regulatory arsenal through introducing a business approach established by crypto intelligence company CipherTrace.
The Traveler tool from CipherTrace gets its name from the fact that it was developed to fulfil the complex criteria of the Financial Action Task Force’s so-called “Travel Rule,” which went into practise for Virtual Asset Service Providers, or VASPs, in 2020.
The FATF’s Travel Rule mandates that regulators and VASPs, such as cryptocurrency exchanges, custody companies, and over-the-counter trading desks, collect and distribute consumer data throughout purchases. This approach largely adheres to the provisions currently in force for money transmitters in jurisdictions such as the United States, which mandate money transmitters to report identifying information about all parties participating in fund transactions between financial institutions.
The different local transpositions of the FATF’s guidance in various jurisdictions around the world render the travel law especially difficult for VASPs. Prior to implementing Traveler, Crypto.com was accepted into the International Digital Asset Exchange Association and Global Digital Finance, two organisations dedicated to establishing common guidelines and regulatory policies for the global digital asset economy.
Traveler, which builds on CipherTrace’s longer-term work on an open-source Travel Rule Information Architecture, or Trisa, is intended to directly solve the FATF-mandated counterparty VASP due diligence.
As a result, the solution enables VASPs to exchange confidential personally identifiable information in order to validate crypto transactions and instantly detects VASP-to-VASP transfers as well as the receiver VASP. The method also checks addresses associated with incoming crypto transactions and verifies the VASP that initiated the transaction. It also generates Know The VASP digital certificates. All of this serves as the foundation for an encrypted, mutually authenticated infrastructure for the safe exchange of confidential data.
Antonio Alvarez, Crypto.com’s chief enforcement officer, explained to Cointelegraph why the company selected the CipherTrace platform in particular:
“For a travel rule tool to be useful, it needs broad acceptance, common standards and interoperability (with other tools). CipherTrace’s Traveler is based on Trisa’s Alliance which aims to address several points including interoperability. We are proud to be the first platform to implement Traveler and look forward to working with CipherTrace and our industry more broadly to standardize how compliance is handled.”
CipherTrace’s chief financial analyst, John Jefferies, said at the start of 2020, “Travel Rule enforcement is simultaneously the biggest milestone and the biggest setback for crypto.” It has compelled and will continue to compel the industry to reach a degree of maturity that will enable it to mature into an institutionally recognised asset class. […] formalised It also poses an existential challenge to multiple exchanges which can cause privacy concerns for consumers. Also with open-source tools like Trisa, the Travel Rule enforcement operations would be costly.”