<a href="https://www.kryptogo.com/blog/how-to-regulate-virtual-assets-about-fatf-travel-rule-recommendations">How to regulate virtual assets? –about FATF Travel Rule recommendations</a><a href="https://www.kryptogo.com/blog/how-to-regulate-virtual-assets-about-fatf-travel-rule-recommendations">In June 2019, the FATF revised their Recommendation 16 (Travel Rule), which fundamentally changes the original crypto world that we are familiar with. With the revision, the proposal has been extended to Virtual Asset Service Providers (VASPs)</a><a href="https://www.kryptogo.com/blog/how-to-regulate-virtual-assets-about-fatf-travel-rule-recommendations">blog.kryptogo.com</a>The Travel Rule is a new regulatory requirement regarding counterparty risks. As we mentioned in our previous article, it is relevant to almost all cryptocurrency industries operating under the jurisdiction of the FATF. The Travel Rule requires that a VASP (Virtual Asset Service Provider), such as an exchange, must identify the originator and beneficiary of cryptocurrency transactions over a certain scale initiated by their users. If the counterparty to those transactions is also a VASP, then the original VASP must transmit the user’s information to the second VASP<img src="https://storage.googleapis.com/kryptogo-website.appspot.com/public/cms/1_Fy_Oay4_Z4_MP_Wtex7_Vvnn_GQ_3d8751016d/1_Fy_Oay4_Z4_MP_Wtex7_Vvnn_GQ_3d8751016d.jpeg" alt="1_FyOay4Z4MP-Wtex7VvnnGQ.jpeg" srcset="https://storage.googleapis.com/kryptogo-website.appspot.com/public/cms/thumbnail_1_Fy_Oay4_Z4_MP_Wtex7_Vvnn_GQ_3d8751016d/thumbnail_1_Fy_Oay4_Z4_MP_Wtex7_Vvnn_GQ_3d8751016d.jpeg 245w,https://storage.googleapis.com/kryptogo-website.appspot.com/public/cms/small_1_Fy_Oay4_Z4_MP_Wtex7_Vvnn_GQ_3d8751016d/small_1_Fy_Oay4_Z4_MP_Wtex7_Vvnn_GQ_3d8751016d.jpeg 500w," sizes="100vw">The regulatory decree corresponding to the actual amount is shown in the figure above.The Travel Rule aims to help cryptocurrency enterprises reduce counterparty risk and establish a source of funds for cryptocurrency received by the users. Although some jurisdictions have implemented different rules, <a href="http://www.fatf-gafi.org/publications/fatfrecommendations/documents/regulation-virtual-assets-interpretive-note.html">the versions in FATF</a> states that VASPs must exchange counterparty information with each other for cryptocurrency transactions valued at more than USD 1,000 or EUR 1,000. Specifically, the originator and beneficiary VASPs must provide the following information to each other:<img src="https://storage.googleapis.com/kryptogo-website.appspot.com/public/cms/eng_b650f5aae5/eng_b650f5aae5.png" alt="eng.png" srcset="https://storage.googleapis.com/kryptogo-website.appspot.com/public/cms/thumbnail_eng_b650f5aae5/thumbnail_eng_b650f5aae5.png 245w,https://storage.googleapis.com/kryptogo-website.appspot.com/public/cms/small_eng_b650f5aae5/small_eng_b650f5aae5.png 500w," sizes="100vw">Information content to be exchanged in a transactionAt first glance, Travel Rule appears to be a simple matter transferring counterparty information between two VASPs. However, the Travel Rule actually requires end-to-end changes to the existing compliance process, as VASPs must identify and take action on all transactions that meet the rule’s thresholds in real time. This brings significant technical challenges especially for large-scale implementation, as blockchain analysis shows that approximately 12% of all VASP transactions in February 2021 (approximately 2 million transactions in total) meet the current FATF proposed USD 1,000 threshold. The technical challenges introduced by the Travel Rule is listed below:<h1>Challenge 1: Identifying Travel Rule Transactions</h1>When a customer initiates a transaction, the originating VASP needs to automatically determine if the transaction meets the Travel Rule requirements. This means they must :<ul><li>Determine if the transaction amount meets the Travel Rule thresholds of the relevant jurisdiction.</li><li>Determine if the counterparty’s wallet is held by another VASP.</li><li>Collect any missing counterparty information.</li></ul>All of this needs to happen immediately.<h1>Challenge 2: Conducting Due Diligence on Counterparty VASPs</h1>Once the originator VASO determined that a transaction meets the requirements of the Travel Rules, it must:<ul><li>Identify counterparty VASPs</li><li>Assess the counterparty VASP’s risk level to determine if the shared user’s personally identifiable information (PII) is secure</li></ul>During the assessment of counterparty risk, the originator VASP must consider the reputation of the counterparty VASP, the quality of the compliance program, the level of information security, and the scope of the company’s own exposure.<h1>Challenge 3: Initiating and completing a Travel Rule transfer</h1>Finally, the originator VASP must have an appropriate communication channels or protocols for secure data transmission with the counterpart VASP. Both VASPs must have a secure way to store the data they receive in order to protect the privacy of customers and prevent internal abuse of that data.But in fact, there is no standard protocol to follow at present. There are more than eight protocols for Travel Rule alone - OpenVASP, TRISA, USTRWG, TRP, SYGNA, Shyft, NETKI, Notabene. For VASP industry, which is inherently weak regional and decentralized, interoperability has become a major obstacle to compliance with regulations.<figure class="image"><img src="https://storage.googleapis.com/kryptogo-website.appspot.com/public/cms/1_9_M2yt_Sd_Qult_LN_3_Fn_PU_km_A_7648c4046a/1_9_M2yt_Sd_Qult_LN_3_Fn_PU_km_A_7648c4046a.jpeg" alt="1_9M2ytSdQultLN3FnPU-kmA.jpeg" srcset="https://storage.googleapis.com/kryptogo-website.appspot.com/public/cms/thumbnail_1_9_M2yt_Sd_Qult_LN_3_Fn_PU_km_A_7648c4046a/thumbnail_1_9_M2yt_Sd_Qult_LN_3_Fn_PU_km_A_7648c4046a.jpeg 245w,https://storage.googleapis.com/kryptogo-website.appspot.com/public/cms/small_1_9_M2yt_Sd_Qult_LN_3_Fn_PU_km_A_7648c4046a/small_1_9_M2yt_Sd_Qult_LN_3_Fn_PU_km_A_7648c4046a.jpeg 500w," sizes="100vw"></figure><h1>KryptoGO Helps VASP Reduce Regulatory Friction</h1>Starting to comply with travel rules early and send signals to regulators to state that the cryptocurrency business is taking regulations seriously. This helps VASPs obtain licenses on time without disrupting the plans which bring their products and services to market.However, in order to comply with the rules, VASP needs to identify transactions that meet the requirements of the rules, extract KYC information from users, and send it to VASP counterparties when the transaction is completed. All of this needs to happen immediately to avoid affecting the user experience, which is not easy for cryptocurrency businesses that process thousands of transactions per day. These three challenges bring us two problems:1 Can all of these challenges be addressed on a large scale with minimal impact on the transaction flow?2&nbsp;How can VASP comply without creating unnecessary friction for users?KryptoGO's KYABC includes checks for natural persons, corporate entities, and blockchain funds.<ul><li>Know Your Address: Check the blockchain addresses of our identified counterparties, including wallet type, transaction information, corresponding services or entities, and risk scores.</li><li>Know Your Business: Review the reputation of the counterparty VASP to ensure that the transaction and information exchange is safe and secure.</li><li>Know Your Customer: Review the identity of originators and beneficiaries for compliance with anti-money laundering regulations.</li></ul>Moreover, through KryptoGO's relay API, cryptocurrency businesses can automatically transact with trusted counterparties while providing them with the data needed to detect suspicious activity and meet regulatory requirements, and complete transactions in different Travel Rule protocols,&nbsp;so as to help our customers meet all the challenges required for large-scale Travel Rule compliance.

The Travel Rule is a new regulatory requirement regarding counterparty risks. As we mentioned in our previous article, it is relevant to almost all cryptocurrency industries operating under the jurisdiction of the FATF. The Travel Rule requires that a VASP (Virtual Asset Service Provider), such as an exchange, must identify the originator and beneficiary of cryptocurrency transactions over a certain scale initiated by their users. If the counterparty to those transactions is also a VASP, then the original VASP must transmit the user’s information to the second VASP.

Top 3 Challenges in Regulatory Implementation for the Travel Rule

The Future is Universal: April 9, 2025

The Signals Update: March 26, 2025

The Pump Hound Update: March 12, 2025

Escape Exchange Risks: Why KryptoGO Self-Custody Wallet is the Ultimate Choice for Web3 Users

Handle Login and Group Chats Update: February 26, 2025

Evolution of Taiwan's VASP Regulation: From Declaration to Licensing

Beginner's Guide to Hyperliquid ft. KryptoGO App: Feb 12, 2025

Refining the Waves with Ocean v3: January 22, 2025

Biweekly Update: January 8th, 2025

The '25 Roadmap Preview: December 18, 2024

“The King of Tron” Update: December 4, 2024

Biweekly Update: November 20, 2024

The 'Pulse' Update: November 6, 2024

In-Depth Technical Analysis: Why Choose a Mature Crypto Wallet Service Instead of Building Your Own

Five Stages of Evolution for Crypto Wallets

Biweekly Update: October 23, 2024

Biweekly Update: October 09, 2024

Biweekly Update: September 25, 2024

Send Via Link campaign and "Gimme more wallets" Update :  September 11, 2024

The “Send Crypto via Link” Update: August 28, 2024

KryptoGO's Award-Winning Innovations at ZK Hack Montreal, ETHDenver, and ETHTaipei

Stake Your Stables! Biweekly update: August 14, 2024

The “Not Just A Wallet” Update: July 31, 2024

Biweekly Dev Update: July 17, 2024

Biweekly Dev Update: July 3, 2024

Biweekly Dev Update: June 5, 2024

Challenges and Solutions for Using Cryptocurrency in Business Operations

Biweekly Dev Update: May 22, 2024

Biweekly Dev Update: May 8th, 2024

Biweekly Dev Update: April 17th, 2024

Biweekly Dev Update: April 3rd, 2024

Biweekly Dev Update: March 20th, 2024

Making Sense of Decentralized Wallets: EOA and Smart Contract Explained

Biweekly Dev Update: March 6th, 2024

Centralized vs. Decentralized: The Ultimate Guide to Choosing the Right Crypto Wallet for Your Business

Navigating Compliance in Taiwan's Cryptocurrency Market: From Fraud Prevention to Enhanced Regulation

【Kind Reminder】Please be vigilant against scams. KryptoGO will never proactively ask you to make investment transactions.

Biweekly Dev Update: February 21th, 2024

Biweekly Dev Update: February 7th, 2024

Web3 Business Operations: Future Trend or Current Necessity?

Biweekly Dev Update: January 24th, 2024

Biweekly Dev Update: January 10th, 2024

Biweekly Dev Update: December 27th, 2023

Biweekly Dev Update: December 13th, 2023

Biweekly Dev Update, November 29th, 2023

Biweekly Dev Update, November 15, 2023

Biweekly Dev Update: November 1st, 2023

Biweekly Dev Update: October 19th, 2023

Biweekly Dev Update: Oct 4th, 2023

The Chatroom and Social Update: September 20th, 2023

Play-to-Earn vs. Blockchain Gaming: Rediscovering the Joy of Play

Product Launch Update: September 6th, 2023

KryptoGO Launches AI-Powered One-Stop Web3 Cloud Solution

Biweekly Update: August 23rd, 2023

The Keyless Wallet Update: August 9th, 2023

Biweekly Update: July 26th, 2023

Biweekly Update: July 12th, 2023

Biweekly Dev Update: June 7th, 2023

Unlock the Future: Passkey + DID + FIDO - Exploring the Next Generation of Digital Wallets and Identities

Biweekly Dev Update: May 24th, 2023

Biweekly Dev Update: May 10th, 2023

Biweekly Dev Update: April 26th, 2023

KryptoGO team wins three ETHGlobal Tokyo Hackathon Awards! Join hands with YGG Japan and IVC to lay out GamiFi industry

Biweekly Dev Update: April 12th, 2023

Help enterprises enter the Web3 world painlessly! What is WaaS?

Biweekly Dev Update: March 22th, 2023

How Much Does It Cost to Develop a Cryptocurrency Wallet on Blockchain?

How to Navigate the Metaverse: A Guide to 7 Different Types of Crypto Wallets

Virtual asset transaction service KYC, AML demand increased! KryptoGO Compliance work with Gaia Information  pioneered regulatory investigation engine

Biweekly Dev Update: March 8th, 2023

DeFi and KYC: Conflict or Coexistence?

Biweekly Dev Update: February 22nd, 2023

KryptoGO Wallet Updates: Supports Ronin chain, Personal Profile, Wallet Connect 2.0

Biweekly Dev Update: February 8th, 2023

Biweekly Dev Update: January 18th, 2023

Coinbase, the most compliant exchange, has been fined $100 million by the government and given a deadline to fix it.

Biweekly Dev Update: January 4th, 2023

Biweekly Dev Update: December 21, 2022

Biweekly Dev Update: December 7th, 2022

Biweekly Dev Update: November 23rd, 2022

Why can't you get your crypto assets back when the FTX exchange collapses? – Not Your Key, Not Your Coin

Biweekly Dev Update: November 9th, 2022

Biweekly Dev Update: October 26th, 2022

Biweekly Dev Update: October 12th, 2022

Biweekly Dev Update: September 28th, 2022

Things you should know about financial security in the Web3 era: How does token, private key, and wallet (account) work?

Collaboration for Web3 Game Wallets: YGG Japan, KryptoGO, and IVC Join Forces

Biweekly Dev Update: September 14th, 2022

Wanting to issue NFT but is complained about the difficult procedure? —Find out what the marketing pain points are from the “distribution process”

Biweekly Dev Update: August 31th, 2022

Crypto Wallets: Custodial vs. Non-Custodial Wallets

All You Need to Know About VASP FATF

Biweekly Dev Update: August 17th, 2022

Taiwan-based KryptoGO Secures US$3M in Seed Funding

Biweekly Dev Update: August 3rd, 2022

FATF Methodology with the Rapid Development of Virtual Assets 

How to regulate virtual assets? –about FATF Travel Rule recommendations

Different transaction monitoring mechanism between Fiat and Crypto

Biweekly Dev Update: July 20th, 2022

The difference between KYC & AML?

Top 3 Challenges in Regulatory Implementation for the Travel Rule

Recommend Articles

Hot Articles

Hot Tags