South Africa’s Regulator Tightens Rules for Crypto Asset Transfers via Latest Directive

May 28, 2024 Bitcoin.com

South Africa’s FIC Unveils Draft Directive for Travel Rule Implementation; Crypto Industry Leader Issues Warning

May 5, 2024 Bitcoin.com

Gemini’s Travel Rule measures reflect ‘worrying creep’ of overregulation

November 9, 2023 Coin Telegraph

Gemini will be restricting its UK users to sending only to 58 virtual asset service providers that are registered under the Travel Rule starting Nov. 17. A Trezor analyst argues the measures will go against the principles of Bitcoin and financial freedom.

Crypto exchange Gemini newly announced measures to comply with the controversial crypto Travel Rule in the United Kingdom reflects a “worrying creep” toward overregulation and will strip customers of their freedom for self-custody, according to a Trezor analyst.

On Nov. 7, cryptocurrency exchange Gemini announced it has made changes in order to comply with the new Travel Rule restrictions for customers in the U.K.

Gemini said it will restrict outward cryptocurrency transfers to a list of 58 virtual asset service providers (VASPs) registered under the Travel Rule Universal Solution Technology (TRUST) starting on Nov. 17.

Gemini’s statement on the new Travel Rule restriction. Source: Gemini

Speaking to Cointelegraph, Trezor Bitcoin analyst Josef Teteka said the move will only serve to limit the options for those looking to self custody their crypto.

“The forthcoming restrictions from Gemini UK will make it much harder for Bitcoin and other cryptocurrency users to move their assets into self custody,” said Tetek, noting that the requirements include providing one’s name, name of beneficiary and in some cases, their address.

“This goes against the fundamental principles of Bitcoin, where the user rightly enjoys freedom, privacy where required, and ultimately self-sovereignty.”

This is dog
Email just received from @Gemini
“Travel Rule: Changes to crypto transfer requirements for UK customers”

global hub for cryptoassets my a**, Rishi!

(I barely use Gemini Anyways but still ‍♂️) pic.twitter.com/tuqhSLyZgg
— Robin Nakamoto (@RobinNakamoto) November 3, 2023

Gemini said its UK restrictions will also apply to incoming transfers from non-TRUST VASPs starting in December, with Gemini stating it may freeze or limit accounts attempting to make inbound transfers.

Tetek said the case at hand represents a “worrying creep towards over-regulation” which could result in the “control of its everyday citizens and the choices they make” around how they save, spend and transfer their assets. He added:

“As we’ve seen again and again, crypto exchanges can and do assume control and ownership of their user’s digital assets, a situation that can end in disaster. Why should they now also be the arbiters of transactional freedom?”

Several X (formerly Twitter) also expressed negative sentiment on the recent Gemini announcement.

Many people have the misconception that the only way to acquire Bitcoin is by buying it on exchanges. This belief is far from the truth. There are countless alternative ways to obtain Bitcoin, such as mining, earning it through services or products, and even P2P transactions.

/2
— rare ☠️ passenger.gfm (@rarepassenger) November 7, 2023

The Travel Rule was created by the United Nations agency Financial Action Task Force in June 2019.

It is a set of global standards that mandates VASPs and other financial institutions to share information about the senders and recipients of virtual assets. Its objective is to make it more difficult for criminals to use cryptocurrencies for illicit activity.

The U.K. passed legislation to begin enforcing the Travel Rule in July 2022 which came into effect in September.

Among the 58 VASPs not restricted to transact with Gemini U.K. users include Binance US, Coinbase, Circle, Fidelity Digital Assets, Kraken and PayPal.

Magazine: Deposit risk: What do crypto exchanges really do with your money?

UK’s Travel Rule comes into effect, could halt certain crypto transfers

September 1, 2023 Coin Telegraph

Coin Telegraph

The crypto Travel Rule, which came into effect on Sept. 1, aims to stop anti-money laundering and counter-terrorist financing activities carried out on-chain.

Cryptoasset businesses in the United Kingdom could now begin withholding certain crypto transfers to comply with the new Travel Rule for crypto that came into effect on Sept. 1.

The rules targeting virtual asset service providers were first introduced by the Financial Conduct Authority on Aug. 17, and see to it that VASPs based in the U.K. will “collect, verify and share information” relating to crypto-asset transfers.

If an inbound payment is received from a person or entity from an overseas jurisdiction that hasn’t implemented the Travel Rule, the VASP must make a “risk-based assessment” as to “whether to make the cryptoassets available to the beneficiary.”

The Travel Rule is designed to bring greater transparency to cryptoasset transfers, making it harder for criminals to use #crypto for illegal activity.https://t.co/kmB6rgMn5e
— Financial Conduct Authority (@TheFCA) August 17, 2023

The same rule would also apply to Brits looking to send payments outside of the U.K.

The Travel Rule was created by the UN agency Financial Action Task Force in June 2019. The U.K. passed legislation to begin enforcing the Travel Rule in July 2022.

It attempts to prevent anti-money laundering (AML) and counter-terrorist financing (CTF) activities carried out on-chain.

Other countries that have adopted the Travel Rule include the US, Germany, Japan, Singapore, Switzerland, Canada, South Africa, the Netherlands and Estonia, according to Sygna.io.

On June 23, the FATF called out member states for failing to sufficiently implement the rule after a survey revealed more than half of them have failed to take any action towards implementing the rule.

A March 2022 survey by FATF found only 29 of 98 jurisdictions at the time passed the requirements needed as part of the travel rules and a small subset of these jurisdictions had started enforcement.

Ian Andrews, the chief marketing officer of blockchain forensics platform Chanalysis explained in April 2022 that coordinating the exchange of information between VASPs cross-borders will be a “pretty hard problem” to solve — at least at the onset.

Magazine: Deposit risk: What do crypto exchanges really do with your money?

Crypto travel rule implementation ‘remains relatively poor,’ says FATF

June 26, 2023 Coin Telegraph

anti-money laundering

The United Nations body called on all member states to implement the Travel Rule “without delay” to close “loopholes” not currently protected by regulation.

A renewed call from the Financial Action Task Force (FATF) has asked countries to implement the “travel rule” to combat money laundering and terrorism financing activities enabled by cryptocurrencies.

On June 23, the United Nations body — whose role is to promote strategies to combat money laundering and terrorist financing — explained that “many” member states have failed to implement the rule.

The call comes after a series of FATF meetings at its headquarters in Paris.

The FATF plenary has concluded. Delegates of governments from around the world discussed a range of money laundering and terrorist financing issues.

See the outcomes of the plenary here➡️ https://t.co/s0nmYw1ca6 #FATFWeek #moneylaundering #terrorismfinancing #followthemoney pic.twitter.com/DTerSET5QT
— FATF (@FATFNews) June 23, 2023

FATF claimed “more than half” of respondents in a survey said they had taken no action to implement the rule:

“More than half of survey respondents have not taken any steps towards implementing the Travel Rule, a key FATF requirement to prevent funds being transferred to sanctioned individuals or entities.”

FATF urged countries to implement anti-money laundering (AML) and counter-terrorism financing (CTF) measures on crypto-related activities “without delay” in order to prevent “criminals” from exploiting “significant loopholes” not protected by regulation.

A March 2022 survey by FAFT found only 29 of 98 jurisdictions at the time passed the requirements needed as part of the travel rules and a small subset of these jurisdictions had started enforcement.

The FAFT travel rule was implemented to target the anonymity of illegal cryptocurrency transactions. It was introduced in June 2019 and last updated in June 2022. A further update of the rules was agreed to by FATF members at the meetings.

Lack of regulation of virtual assets in many countries creates opportunities that criminals and terrorist financiers exploit.

The FATF is closely monitoring global implementation of its strengthened requirements for virtual assets.

Learn more➡️https://t.co/rDuXbjpJh7 #FATF pic.twitter.com/3HuZIbT4ZK
— FATF (@FATFNews) June 21, 2023

FAFT said it would publish a report on June 27 calling on member countries to implement its recommendations in order to close the loopholes which it says criminals look to exploit.

The report will make mention of North Korea’s illicit virtual asset activities, where stolen funds are then allegedly funneled into its Weapons of Mass Destruction program, FAFT said.

Illicit activities from other “emerging risks,” such as stablecoins, decentralized finance, nonfungible tokens (NFTs) and peer-to-peer transactions will also be discussed in the report, it added.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Japan’s crypto Anti-Money Laundering measures to start in June: Report

May 24, 2023 Coin Telegraph

AML

The Japanese parliament has decided to roll out tougher AML procedures in line with the “travel rule.”

Lawmakers in Japan have decided to enforce stricter Anti-Money Laundering (AML) measures to trace cryptocurrency transactions from June 1.

On May 23, the Japanese parliament made the decision to roll out tougher AML procedures from next month, according to a report the same day from local media outlet Kyodo News.

The move aims to bring Japan’s legal framework in line with global crypto regulations.

Lawmakers revised the AML legislation in December after it was deemed insufficient by the international financial watchdog, the Financial Action Task Force (FATF).

According to reports, a vital feature of the new measures is the enforcement of the “Travel Rule” to keep a more accurate track of criminal proceeds.

The travel rule requires any financial institution processing a crypto transfer greater than $3,000 to pass on customer information to the recipient exchange or institution. The data should include the name and address of the sender and recipient and account information.

The Travel Rule was discussed by global leaders in mid-May at the G7 meeting held in Japan, with the G7 Committee clear in its support of the Travel Rule for crypto transactions.

It supported FATF initiatives on accelerating global standards for crypto “including the ‘travel rule’, and its work on emerging risks, including from DeFi arrangements and peer-to-peer transactions.”

“G7 countries should lead by example and regulate the crypto sector so that no safe havens exist for illicit crypto transactions”#FATF President T. Raja Kumar´s message to #G7 leaders ahead of the summit in Japan
Read article: https://t.co/l1OTdjGgLY
: https://t.co/GqHhVwoqY9 pic.twitter.com/uDurg1QSDu
— FATF (@FATFNews) May 18, 2023

Japan was one of the early adopters of crypto, legalizing it as property. Crypto regulations in Japan are some of the most stringent globally.

Japan’s financial regulator, the Financial Services Agency, tightened rules on crypto exchanges following the major hacks of the exchanges Mt.Gox and Coincheck.

The FSA has several rules for exchanges to protect customers including separate holdings of customer and company assets, with holdings verified in annual audits.

Investors cannot borrow more than twice their investments for leveraged trades on exchanges. Licensed crypto exchanges are also required to hold at least 95% of customer funds in cold wallets.

In April, the Web3 project team of Japan’s ruling Liberal Democratic Party released a white paper proposing ways to expand the country’s crypto industry.

Magazine: Crypto City: Guide to Osaka, Japan’s second-biggest city

EU Parliament Greenlights Markets in Crypto Assets Law, Tracing Rules

April 21, 2023 Bitcoin.com

Paypal adds to list of crypto heavy hitters on the TRUST network

August 23, 2022 Coin Telegraph

Coin Telegraph

Paypal has stepped up its regulatory compliance by joining TRUST to streamline its reporting requirements relating to the digital assets “travel rule.”

Crypto-friendly digital payments giant Paypal has been added to the Travel Rule Universal Solution Technology (TRUST) network, joining a host of big names in crypto that have moved to comply with digital asset travel rules.

The announcement comes two months after the payments giant rolled out infrastructure enabling users to transfer, send and receive digital assets between PayPal and other wallets and exchanges in June this year. Prior to that, users were only able to buy and sell crypto within Paypal following the firm’s initial jump into the sector in October 2020.

Now you can easily use your crypto with PayPal. Bring it into PayPal and send some to friends and family—all in one place. https://t.co/k24TVHoSYh pic.twitter.com/v0CeV9dNXa
— PayPal (@PayPal) August 15, 2022

TRUST was launched by a group of 18 U.S. virtual asset service providers (VASPs) in February, with heavy hitters such as Coinbase, Paxos, Circle, Kraken, and Robinhood participating from the get-go. The number has since expanded to 38 now that Paypal has joined the ranks.

“The addition of PayPal marks another milestone in TRUST’s journey to become the global, industry-standard solution for Travel Rule compliance,” Coinbase noted in an Aug. 23 announcement.

Under the Bank Secrecy Act (BSA) rule 31, more commonly known as the "Travel rule”, U.S. VASPs are legally required to pass on specific information relating to customer fund transfers from one financial institution to another. The threshold for identifying fund transfers, and the people behind them, start at $1,000.

Big day for the Travel Rule Universal Solution Technology (TRUST) network as we welcome digital payment leader @PayPal. Our industry-driven solution to balancing Travel Rule compliance with protecting customer privacy & security is now 38 members strong. https://t.co/OybFRjbmwU pic.twitter.com/eKmAYHBoLQ
— Circle (@circlepay) August 22, 2022

As such, the group of U.S. VASPs launched TRUST to streamline reporting and make the sharing of information between them easier and more transparent. TRUST utilizes a solution which is composed of two main features; a centralized bulletin board to identify each VASP party on both ends of a transaction and encrypted point to point (P2P) channel to securely exchange data.

The group was formed in response to a recommendation from the Financial Action Task Force (FATF) in June 2021 for VASPs across the globe to adopt specific principles in order to maintain compliance with anti-money laundering (AML) and anti-terrorist financing (ATF) policies.