Japanese Crypto Exchanges to Enforce FATF’s Travel Rule Next Month
All of Japan’s crypto exchanges will adopt the Financial Action Task Force (FATF)’s Travel Rule on April 1 – a move that means most of East Asia’s biggest trading platforms will have begun complying with the controversial protocol before the law even obliges them to do so.
The Travel Rule essentially requires platforms to stamp out anonymity in crypto transactions in a bid to fight money laundering. At its heart, the rule seeks to create a web of data sharing whereby both the senders and recipients of all cryptoasset transfers have to exchange identifying information, flag suspicious-looking transactions, and inform regulators when they spot a transfer that looks out of place.
The FATF has urged the international community to hurry up and enshrine the Travel Rule into national law. But East Asian trading platforms – which are among the most tightly regulated exchanges in the world – have been keen to show they are capable of complying even without legal prompts.
Hedge Guide reported that the Japanese Virtual Currency Exchange Association (JVCEA), a self-regulating body that comprises all licensed Japanese crypto exchanges as top-tier members and a number of leading firms waiting for licenses as second-tier members, was responding to a call from the regulatory Financial Services Agency (FSA).
The FSA last year requested that JVCEA members form a plan for Travel Rule adherence, and the latter has responded with a two-stage response.
As of April 1, all crypto transactions made through exchanges in Japan will need to be accompanied by the following data:
- The recipient’s name
- Data on the origin of the transaction (and whether or not the transaction originates from an exchange)
- Data on the recipient’s address, and information about whether or not the recipient’s wallet is hosted on an exchange
In a second step, to be put into place on October 1, more details on the recipient will also need to be provided, as well as information about the “purpose of the transaction,” although exact details are “yet to be decided upon.”
Further information will also be required of anyone conducting transactions worth over USD 865.
As reported, South Korea’s leading crypto exchanges are either collaborating in joint Travel Rule compliance efforts or are pioneering their own models, months ahead of the promulgation of legislation that obliges them to do so.
Also, in February, a group of major crypto companies, such as Anchorage, Bitgo, BlockFi, Circle, Coinbase, Gemini, Kraken, and more, announced the launch of the Travel Rule Universal Solution Technology (TRUST), a solution designed to comply with a requirement known as the Travel Rule while protecting the security and privacy of their customers, they said. The solution already includes well-known members across the industry within the US, while the global expansion will follow “shortly,” they added.
____
Learn more:
– South Korean Crypto Exchanges Face AML Probes as Regulators Test Compliance
– Coinone Sends KYC Warning to Users of Centralized Crypto Exchanges
– ‘Don’t Be Lulled’ as European Commission Mulls a Crypto KYC Trap
– FATF Wants to ‘Gut’ DeFi with ‘Vague’ New Guidelines, Say Crypto Players
– FATF Wants Countries to Get Serious About Crypto Regulation, Mentions NFTs, DeFi
