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

November 9, 2023 Coin Telegraph

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.

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Hong Kong’s crypto rules set a high bar for ‘good reason,’ says SFC adviser

April 5, 2023 Coin Telegraph

Coin Telegraph

Lucy Gazmararian, an advisory board member to Hong Kong’s securities regulator, said its crypto rules might present short-term challenges to crypto startups.

The standards for Virtual Asset Service Providers (VASPs) in Hong Kong are set “incredibly high,” as the Securities and Futures Commission (SFC) wants the crypto industry to match the same compliance standards as traditional financial firms.

Speaking to Cointelegraph at the Hong Kong WOW Summit, Lucy Gazmararian, the founder of crypto venture firm Token Bay Capital and an SFC Fintech Advisory Group member, explained that while “the bar is set high,” it’s in place for a “good reason.”

“The standards are incredibly high because [the SFCs] approach is to ask VASPs to apply the same standards that existing financial institutions like huge banks and huge asset managers have to comply with.”

The SFC published a consultation paper on Feb. 20, which considered whether licensed VASPs should serve retail investors, and what standard of investor protection measures should be imposed.

Anti-Money Laundering and Know Your Customer policies were also discussed.

Gazmararian said these high standards might pose challenges for the crypto industry in Hong Kong over the short term.

“The issue is that crypto businesses are often in the startup phase,” she explained. “Many have funding but not huge amounts, not hundreds of millions.”

“To comply with the framework does incur significant costs,” she added, citing the need for local VASPs to have insurance, independent assessment reports and store crypto in cold storage.

“A criticism has been if you’re a startup crypto company, how do you even get started? Is that going to stifle the industry?”

With a solid regulatory framework in place, Gazmararian believes more well-capitalized financial firms will be willing to help promising startups get off the ground.

“I think companies that do get the license are going to be upholding the most stringent standards so the bar is set high but I think for good reason,” Gazmararian said.

“Cryptocurrency platforms are part of the entire Web 3.0 ecosystem, and we strongly support the development of the entire Internet ecosystem.
— ivanferrari.eth.zk (@ferrarivarese) April 3, 2023

The SFC encouraged individuals, corporations and crypto firms to review the 361-page consultation paper and provide feedback.

The securities regulator wants these entities to share their views and point to things that may have been missed because they are “absolutely focused” on getting everything right, Gazmararian explained.

Submissions for feedback on the consultation paper closed on March 31.

In recent months, Hong Kong has made considerable ground in establishing itself as the world’s next crypto hub.

More than 80 digital asset firms have expressed interest in establishing a presence in Hong Kong over the last few months, according to a March 20 statement by the Secretary for Financial Services and the Treasury, Christian Hui.

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