UK Implements Crypto Travel Rule: What You Need to Know
Getting Started with Crypto Travel Rule:
Created in June 2019 by the UN’s FATF to stop money laundering through cryptocurrencies.
- New crypto law in the UK (starting September 1):
- The FCA put it in place on August 17.
- Requires Virtual Assets Service Providers (VASPs) to gather, verify, and share information about cryptocurrency transactions.
- Includes a risk assessment for payments from foreign countries that don’t follow the rules, and it applies to transactions made by UK citizens outside of the country.
Statement from the FCA about the Travel Rule:
- tries to raise standards in the cryptoasset market to protect consumers and keep the market honest.
- Part of the work is to make the UK’s cryptoasset business more competitive.
Adoption of the Travel Rule Around the World:
- Aside from the UK, the Travel Rule has also been put into place in Switzerland, the US, Japan, Canada, Singapore, South Africa, and the Netherlands.
How to Follow the Crypto Travel Rule:
- At first, it was meant to stop banks and other financial institutions from moving money.
When the amount of a transaction is more than $1000, VASPs are required to share transaction information. This varies from country to country.
In the United States, it refers to all transactions over $3000.
Effects on VASPs and people who use crypto:
- Different foreign approaches could make it hard for VASPs to meet all of the rules.
- There are worries about the privacy of user data and the need for more security steps.
- Problems with getting different countries’ privacy rules to work together.
The main goal:
- Stop bad players from using cryptocurrencies to do illegal things, which will keep the ecosystem healthy.
- The Crypto Travel Rule is an international attempt to make cryptocurrency transactions more transparent and stop illegal activities. However, both service providers and users will have to work hard to make it work.