Crypto Service Providers are Willing to Adopt the FATF Travel Rule: Report

Against the general perception that crypto-assets service providers are shying away from regulations, a new report from Notabene has revealed that the majority of companies operating in this space are willing to implement the Financial Action Task Force’s so-called Travel Rule. According to the survey which featured 56 businesses, 13% of which are a bank or operate using a banking license, and 86% are crypto native firms.

The respondents to the survey were well distributed with 45% being based in the Asia Pacific region, 30% resident in Europe, the Middle East, and Africa, and the remaining 25% being North American-based entities. Per the survey, 70% of these respondents are either already complying with the Travel Rule or are in the process of implementing it by the end of the second quarter of this year. 

The Financial Action Task Force (FATF) is a multinational organization that helps in the monitoring of transactions to prevent funds from flowing into the hands of terrorists and other bad actors. With the advent of privately issued digital currencies like Bitcoin (BTC), Ethereum (ETH), and other coins that favor the anonymity of transactions, the FATF has had to adjust its measures to accommodate this new form of money.

In retrospect, the FATF has published the Travel Rule which stipulates that the details of the sender and beneficiaries of transactions of $1,000 and above be reported to counterparts, most of which are regulators, now also applies to all players in the crypto industry.

Compliance Level is Higher than Expected

While the cryptocurrency ecosystem is all about embracing the principles of decentralization and privacy, firms operating in this space are surprisingly exhibiting a higher than expected level of compliance to the rule.

Per the survey, one-third of the surveyed outfits making up 31% of the lot have completely or partially adhered to the regulation. Additionally, the report also revealed that 92% of respondents have internal compliance and legal departments, and 78% of these businesses consider these teams able to guarantee the company acts in accordance with external rules and internal controls.

A significant number of the respondents, though willing to comply, still have issues with the technical provisions to comply with provisions. 

Managing users’ data and meeting the reporting standards on records in an ecosystem where many traders transact over $1,000 on a daily basis is hard to do. However, the willingness amongst service providers, such as Binance complying with the travel rule is a show that the cryptocurrency ecosystem and the innovators backing it are in tandem with regulators just as every financial market player is.