Travel Rule : presque toutes vos transactions en cryptomonnaies seront bientôt surveillées

Travel Rule: Nearly All Your Cryptocurrency Transactions Will Soon Be Monitored

Parallel to the MiCA regulation, the Council of the European Union also adopted the Transfer of Funds Regulation (TFR), a set of texts that aims to drastically increase the monitoring of cryptocurrency flows between digital asset service providers. What will change in your daily life as soon as these measures come into force?

TFR about to enter into force in the European Union

you will not have escaped, the European Union is taking great steps to establish a regulatory framework for the cryptocurrency ecosystem.

Parallel to the approval of the MiCA regulation by the Council of the European Union, the latter also validated another aspect of the regulation: the Funds Transfer Regulations (TFR).

💡 Before discovering the TFR measures, find the emblematic measures of the MiCA regulation that will come into force in 2024.

As with MiCA, TFR still needs to be validated by the European Parliament on October 10, but the result of the vote is already known, because TFR was the subject of a political agreement between the institutions involved last June. After this vote, TFR will be entrusted to lawyers and linguists for publication in the Official Journal of the European Union.

The provisions of the TFR will then enter into force in 2024, 18 months after their publication in the Official Gazette.

What are the changes made by TFR?

the The Funds Transfer Regulation rhymes with the arrival of the Travel Rule for cryptocurrencies. The travel rule is a provision recommended by the Financial Action Task Force (FATF), which obliges the actors involved – the Crypto asset service provider (CASP), equivalent to PSAN in French, to exchange information about their customers for certain transfers.

This standard was developed for the fight against money laundering and the financing of terrorism (LCB-FT). The travel rule will also allow businesses to report suspicious activity and allow authorities to demand details of transactions.

Let’s look at this in more detail with the 3 situations provided by TFR.

The travel rule between CASPs

In the context of applying the Travel Rule, the biggest problem for CASPs and their users lies in the fact that the rule applies regardless of the amount transferred. So even if you only transfer €5 worth of Bitcoin (BTC) from one platform to another, the travel rule will apply.

Cela implies that the CASP donneur d’ordre devra transmettre avec votre transaction vos noms et prénoms, le portefeuille de destination, votre number de compte, votre adresse postale, votre number d’identité (carte d’identité ou passport) ou votre date et place of birth.

On behalf of the CASP beneficiary of the transaction, the latter must transmit his name and surname, his address and his account number.

To comply with the Travel Rule, there are already solutions such as VerifyVASP (UpBit and Chainalysis) or TRUST (Coinbase). These entities represent conglomerates of players that have developed solutions to easily exchange their customer data under the Travel Rule.

The travel rule between a CASP and a self-hosted wallet

For transfers from a CASP to a self-hosted wallet (i.e. all wallets where the user has their private key), the Travel Rule will apply from a threshold set at €1,000.

Initially, all transfers between a CASP and a self-hosted wallet were affected by the travel rule. So it’s a small win for the ecosystem.

To comply with the travel rule in such a situation, solutions such as Sismo and Anima Protocol are considered.

The rule of travel between self-hosted wallets

Among all these provisions, it should be noted that the Travel Rule will not apply to exchanges between 2 self-hosted wallets. For example, a transaction made between 2 MetaMask wallets will not be subject to the Travel Rule.

What about the GDPR?

With respect to the GDPR (General Data Protection Regulation), CASPs must respect its provisions when applying the Travel Rule. On this subject, Adam adds:

“A CASP can block a transfer if it considers that the other opposing CASP does not comply with the RGPD or that it does not have sufficient security measures [pour contrer les hacks ; NDLR]. »

We thank Adam (Association for the Development of Digital Assets) for answering our questions about TFR.

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Source: Document published by the Council of the European Union

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