Some major crypto exchanges and custody companies gathered to launch the Travel Rule Universal Solution Technology, also called TRUST. Announced by Coinbase, this “industry-driven” solution is developed to comply with the Financial Act Task Force’s (FATF) anti-money laundering (AML) Travel Rule.
Currently, 18 crypto firms have joined TRUST to tackle money laundering. According to Coinbase, the TRUST members are: “Anchorage, Avanti, BitGo, bitFlyer, Bittrex, BlockFi, Circle, Coinbase, Fidelity Digital Assetsˢᵐ, Gemini, Kraken, Paxos, Robinhood, Standard Custody & Trust, Symbridge, TradeStation, Zero Hash, and Zodia Custody.”
Moreover, the AML solution is expected to have many more participants, as per the announcement.
TRUST’s main goal
The TRUST solution associates aim to provide some basic and necessary customer data for FATF about the transactions over the USD/EUR 1,000 threshold. In Oct last year, the Financial Act Task Force announced its Travel Rule, a “guidance for a risk-based approach,” for all the “Virtual Asset Service Providers” to stop money laundering, funding the expansion of weapons of mass destruction and terrorist financing.
“To do this, a leading group of crypto exchanges came together to create a solution in the crypto space, while continuing to protect the security and privacy of our customers’ personal information.” The announcement stated, “this unprecedented effort led to a jointly designed solution, TRUST, which we hope will soon become the industry standard for complying with these requirements.”
The 18 crypto companies have incorporated three main safeguards for the best compliance with the Travel Rule, according to the announcement.
- None of these companies will store “sensitive customer information” where they could be prone to hacks and thefts. Instead, they use end-to-end encrypted platforms to share the data between members.
- To make sure the right data is sent to the right member, TRUST uses proof of ownership to verify the owner of the digital assets before transmitting the required information.
- TRUST has partnered with Exiger, a New York-based technology firm that helps fight financial crime and fraud. Furthermore, all newcomers are required to “meet core anti-money laundering, security, and privacy requirements before joining TRUST.”
On Jan 31, Binance restricted many accounts in Nigeria to comply with the AML and KYC standards. The largest crypto exchange by market cap said in a blog post that the reason was the platform’s security.
Binance still did not mention why they didn’t join the TRUST solution. The centralized crypto exchange faced allegations regarding money fraud due to a lack of adherence to regulations.
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