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A specter is haunting the cryptoeconomy, and it’s the specter of the “Travel Rule” that’s been pushed forth to apply to cryptocurrency exchanges by the Group of 20’s Financial Action Task Force (FATF).
Those dictates, finalized just days ago, are unprecedented and onerous for cryptocurrency enterprises, making it so these companies have to share data on users transferring sums over $1,000 USD.
Accordingly, the CipherTrace-Shyft partnership will develop a compliance system based on cryptographic access controls that will allow platforms to “securely transfer Proof of Knowledge without disclosing personally identifying information (PII),” the companies jointly declared on July 2nd.
G20 Looks to Bring Cryptoeconomy to Heel
To date, the fledgling cryptoeconomy has been like the Wild West — open and on the edge of regulation. But the G20 is looking to put an end to what wildness it can by bringing the digital asset ecosystem into the mainstream fold — and under mainstream control.
The body, an intergovernmental economic forum comprised of 19 member nations and the European Union, had tasked its anti-money laundering task force with finalizing standards around virtual asset providers (VASPs) ahead of the group’s summit in Osaka, Japan, at the end of June.
That finalization has been months in the making. Back in February, FATF first proposed to start enforcing stricter Know Your Customer (KYC) and anti-money laundering (AML) rules against crypto exchanges. That proposal got even stricter as it matured, with its final rendition completed last month.
At this year’s summit, the G20 officially confirmed its commitment to adhere to the new standards, meaning there’s no turning back for exchange’s at this point.
Now, these platforms are set to face the same kinds of requirements that banks do under the U.S. Bank Secrecy Act’s so-called Travel Rule. As such, these crypto services will need to collect account information like wallet and location data in order to transfer it as needed to other exchanges.
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