CipherTrace has unveiled its answer to one of the thorniest questions now facing the cryptocurrency industry: how to securely share information about customers under new global regulatory guidelines.
On Tuesday, the blockchain security firm published its final white paper and open source software for wallet providers and crypto exchanges to comply with the Financial Action Task Force (FATF)’s “travel rule.”
The intergovernmental body dedicated to fighting money laundering and terrorism financing recommended in June that countries require exchanges and wallet providers to pass each other information about customers when transferring cryptocurrency.
This means that “virtual asset service providers” (VASPs) worldwide will have to hold sensitive personal information not only about their customers, but who their customers are transacting with.
Opponents of the recommendation had claimed implementing such a rule would be “onerous” at best, but failed to sway FATF. Now, tech vendors are jockeying to offer solutions.
“The industry itself has said it’s virtually impossible to adhere to the travel rule,” CipherTrace chief marketing officer John Jefferies told CoinDesk. “The reality is it can be done.”
CiperTrace’s Travel Rule Information Sharing Architecture (TRISA) would allow exchanges and wallet providers to share payment details and confidentially exchange customer know-your-customer (KYC) information, Jefferies said.
The reference implementation, a basic version of the software that others can modify, “isn’t even that heavy,” he said, meaning it won’t require much in the way of processing power. Much of the requirements are met once the exchanges establish they’re “talking” to the right counterparty.
“While this rule may cause some consternation with respect to privacy because these exchanges are exchanging their data,