TRISA Launches Travel Rule Testnet to Support Cryptocurrency Exchanges and Other VASPs in Continuing Operations Under Increasingly Strict Compliance Regimes
TRISA’s Open-Source MVP and Testnet Enables Exchanges to Securely Share Sensitive Transaction Details to Comply with Travel Rule Regulations
The Travel Rule Information Sharing Alliance (TRISA.io) released its minimum viable product (MVP), a major upgrade to the open-source architecture enabling VASPs to test securely sharing the cryptocurrency transaction details required to meet the FATF and FinCEN’s Travel Rule requirements.
The Financial Action Task Force (FATF) created Recommendation 16, what has been called the Travel Rule guideline, to guard against money laundering and other illegal actions using cryptocurrencies. The Travel Rule requires Virtual Asset Service Providers (VASPs), including exchanges, banks, OTC desks, hosted wallets and other financial institutions, to share certain identifying information about the recipient and receiver for cryptocurrency transactions over USD/EUR 1000 globally.
As a result, Hong Kong, Singapore, and Switzerland forbid exchanges to operate without licenses that enforce Travel Rule compliance, and Canada will require compliance by July 2021. In the US, the rule had been technically in place but seldom enforced; however, in October 2020, FinCEN proposed lowering the threshold for travel rule (Bank Secrecy Act (BSA) rule [31 CFR 103.33(g)]) information sharing and retention from $3,000 to $250 for all cross-border payments involving US financial institutions, including VASPs. Regardless of the threshold, this rule change will significantly impact exchanges, OTC desks, and kiosks by requiring travel rule compliance in the very near term. The proposed rule would define convertible virtual currency (CVC) as a medium of exchange and would explicitly apply the Travel Rule to domestic and cross-border transactions.
“These recent indications by various jurisdictions around the globe of impending Travel Rule enforcement underline the need for immediate compliance solutions and adoption on the part of VASPs.” expressed John Jefferies, Co-Chairman of TRISA. “TRISA’s open-source MVP and Testnet give VASPs an opportunity to validate the compliance solution safely with test data.”
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Chief Compliance Officer at Paxful Lana Schwartzman conveyed, “Now more than ever with the potential changing regulations, it is important for the crypto industry to have open and interoperable solutions such as TRISA that support financial inclusion and enable VASPs of any size or geography to achieve travel rule compliance.”
Thomas Hardjono of MIT Connection Science & Engineering shared, “The launch of the TRISA Testnet represents a major milestone in the development of Trust Infrastructures to support VASPs in attaining compliance to the KYC/AML requirements in the emerging crypto-assets space. The TRISA model uses the standard X.509 certificate for VASPs, with Extended Validation (EV) fields that permit any recipient to quickly authenticate the VASP and to validate the legal status and business information of the VASP. A core component of TRISA is its VASP Directory that securely lists validated VASPs that permit users, regulators and other VASPs to search and locate VASPs at a global scale, proving a solution to the Sunrise problem.”
TRISA’s open-source MVP product provides an interoperability and communications framework to establish the identity of VASPs and enable them to securely share the sensitive information required of them to achieve Travel Rule compliance. The MVP architecture is composed of:
1. A VASP directory that allows for exchanges and other VASPs to verify the entity with which they are sharing personally identifiable information (PII)
2. An open-source framework for enabling secure messaging between VASPs
3. Robot VASPs that give users the ability to interact with the test MVP and send and receive transactions to see how this is done securely within a private sandbox