Unlock stock picks and a broker-level newsfeed that powers Wall Street.
Few Crypto Firms Even Trying to Comply With FATF's ‘Travel Rule’

In This Article:

When it comes to complying with the so-called travel rule, the cryptocurrency industry has a long way to go.

And it’s unclear when it will reach the destination – if, indeed, it can or even wants to.

More than two and a half years after the Financial Action Task Force (FATF) announced that it intended to require cryptocurrency firms to retain the same customer data as banks and money services businesses for certain transactions, there is widespread unanimity among crypto groups on two points.

The first is that, despite strong initial resistance, the industry has come together to make remarkable progress toward a shared set of standards that allow virtual asset service providers (VASP), as the FATF calls them, to comply with the requirement, commonly known as the “travel rule.”

The second point of agreement is that the day when all crypto transactions meeting the FATF threshold of $3,000 or more are actually compliant with that rule is still far away.

Rob Garver is a longtime Washington, D.C., journalist who has written for American Banker, the Fiscal Times, Voice of America and ProPublica. This article is part of CoinDesk’s Privacy Week series.

The real compliance work has been done by just a small fraction of the thousands of VASPs that will eventually have to come into compliance with the requirements as the FATF’s 39 member jurisdictions adopt the standard.

“I would say that the number of VASPs actually doing anything directly with a travel solution would be numbered in hundreds, no more than that,” said Siân Jones, a senior partner with XReg Consulting. That’s just a sliver of the 30,000 or more registered or licensed in different jurisdictions around the world.

Among the relatively few VASPs that have taken any steps, “not all of those are in what you might describe as a ‘live’ mode,” Jones said. “You can imagine these 30,000 VASPs around the world all have to talk to each other eventually, and we're nowhere near the critical mass that would make that realistic. We are still way off.”

The situation is apt to frustrate governments that are worried about blind spots when fighting financial crime, and businesses that can’t be fully compliant with the rule until all or most of their peers are.

On the other hand, crypto users who are in no rush to have their personal information shared with strangers in foreign countries are likely to be relieved by the slow progress. If anything, they would prefer that companies in the field think twice before actively participating in efforts to implement the travel rule.

“Anyone in the ‘crypto’ industry who is eagerly attempting to comply with FATF guidelines should take a moment to employ some introspection and ask why they are here in the first place,” said Marty Bent, a prominent bitcoin investor and critic of the expansion of anti-money laundering requirements into the crypto space. “Bitcoin was created to completely obliterate this type of demonic control. Those who tell themselves that they align with the mission of Bitcoin should reject FATF guidelines and engage in civil and corporate disobedience.”