EagleFX

A specter is haunting the cryptoeconomy, and it’s the specter of the “Travel Rule” that’s been pushed forth to apply to cryptocurrency exchanges by the Group of 20’s Financial Action Task Force (FATF).

Now, blockchain analysis firm CipherTrace has partnered with blockchain attestation and identity platform Shyft to make sure exchanges can abide by the task force’s latest dictates while ensuring their users’ private information is protected.

CipherTrace

Those dictates, finalized just days ago, are unprecedented and onerous for cryptocurrency enterprises, making it so these companies have to share data on users transferring sums over $1,000 USD.

Accordingly, the CipherTrace-Shyft partnership will develop a compliance system based on cryptographic access controls that will allow platforms to “securely transfer Proof of Knowledge without disclosing personally identifying information (PII),” the companies jointly declared on July 2nd.

G20 Looks to Bring Cryptoeconomy to Heel

To date, the fledgling cryptoeconomy has been like the Wild West — open and on the edge of regulation. But the G20 is looking to put an end to what wildness it can by bringing the digital asset ecosystem into the mainstream fold — and under mainstream control.

The body, an intergovernmental economic forum comprised of 19 member nations and the European Union, had tasked its anti-money laundering task force with finalizing standards around virtual asset providers (VASPs) ahead of the group’s summit in Osaka, Japan, at the end of June.

That finalization has been months in the making. Back in February, FATF first proposed to start enforcing stricter Know Your Customer (KYC) and anti-money laundering (AML) rules against crypto exchanges. That proposal got even stricter as it matured, with its final rendition completed last month.


Cryptorocket

At this year’s summit, the G20 officially confirmed its commitment to adhere to the new standards, meaning there’s no turning back for exchange’s at this point.

Now, these platforms are set to face the same kinds of requirements that banks do under the U.S. Bank Secrecy Act’s so-called Travel Rule. As such, these crypto services will need to collect account information like wallet and location data in order to transfer it as needed to other exchanges.

The regulatory shift means exchanges have a lot more work to do in processing transactions. And that’s where the CipherTrace and Shyft collaboration comes in.

Toward Smarter Compliance

The compliance system as outlined by CipherTrace and Shyft would give crypto exchanges the ability to share information about suspicious user activity in an efficient, private, and compliant manner.

CipherTrace chief executive officer Dave Jevans hailed the initiative as paving the way for the future of enterprise compliance in the cryptoeconomy:

“With cryptographically controlled privacy mechanisms, it is possible to have both anonymity and responsible disclosure of the source of funds for legitimate purposes such as criminal or terrorist investigations and AML compliance. This is the direction that CipherTrace is working on for the future growth of cryptocurrencies globally. We believe that there are technological and regulatory solutions that can preserve privacy while enabling security and compliance.”

For his part, Shyft founder Joseph Weinberg noted the program was a way for cryptocurrency exchanges to update their operations without having to start from the ground up, saying:

“We make sure KYC checks can be transferred across networks in a secure manner without compromising identity information. This program bridges a critical gap between new regulatory standards and existing exchange operations to greatly strengthen the crypto ecosystem with a practical implementation of the FATF’s Travel Rule.”

The partnership comes after CipherTrace highlighted in May how $350 million worth of stolen cryptocurrency was sloshing around the cryptoeconomy in Q1 2019. With that said, there’s no shortage of tainted funds that exchanges will want to stay abreast of.


Buy Crypto    Trade Crypto
eToro Risk Warning: 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Avatar

Posted by William M. Peaster

William M. Peaster is a professional writer and editor who specializes in the Bitcoin, Ethereum, and Dai beats in the cryptoeconomy. Has appeared in Blockonomi, Binance Academy, Bitsonline, and more. Enjoys tracking smart contracts, DAOs, dApps, and the Lightning Network. Learning Solidity.


All content on Blockonomi.com is provided solely for informational purposes, and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security, product, service or investment. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate.

Leave a reply

Your email address will not be published. Required fields are marked *