Coinbase, the publicly-listed crypto company announced on Wednesday that it would be launching a collaborative effort named TRUST. This stands for ‘Travel Rule Universal Solution Technology’ and has been referred to as an ‘industry-driven solution’ that has been developed to comply with the Travel Rule of the Financial Action Task Force (FATF). So far, there are 17 other companies that have joined Coinbase in this effort and it is also open to other companies who might be interested in joining the initiative. The Travel Rule introduced by the FATF had been a major concern for the crypto industry for quite a while.
All virtual asset service providers (VASPs) had been informed that they have to adhere to the regulatory policy. Guidelines have been released on the Travel Rule by the FATF, as the intergovernmental organization believes that all VASPs also need to comply with this rule. To put it simply, the FATF had developed the ‘Travel Rule’ as a regulatory guideline in order to combat the problems of money laundering and illicit transactions. According to the rule, all companies that are dealing in the finance industry have to share KYC/AML transmission data about the identities of their customers to the next financial institution involved.
There is a threshold for the transfer amount that is associated with the Travel Rule of the FATF and this has been set at $3,000, or more. On Wednesday, Coinbase published a blog post in which it explained that it had drafted the TRUST plan with a number of other well-known VASPs. Some of the companies that are part of this collaborative effort include names like Fidelity Digital Assets, Zero Hash, Kraken, Paxos, Standard Custody & Trust, Blockfi, Zodia Custody, Bittrex, Robinhood, Bitgo, Bitflyer, Symbridge, Circle, Gemini, Anchorage, Avanti and Tradestation.
Coinbase said that they had come up with TRUST primarily to ensure top-tier compliance with the FATF’s Travel Rule and also honor the expectations of customers about how their information is handled. The TRUST plan comprises of Coinbase and 17 other crypto companies that have come up with an effort known as the Crypto Market Integrity Coalition (CMIC). Launched in the previous week, the specific coalition stated that their plan is to promote regulatory as well as public confidence in cryptocurrencies and the digital asset class. There are three fundamentals that were highlighted by the TRUST plan for ensuring compliance.
First and foremost, members of TRUST should never store sensitive customer data centrally. Secondly, a mechanism will be leveraged by TRUST that uses of ‘proof of address ownership’. Last, but not least, all the members also need to have core privacy and security standards. This means that they need to comply with anti-money laundering, privacy and security requirements before they join TRUST. They also said that they are entering into a partnership with global market leader Exiger for technology-enabled risk management and compliance solutions. TRUST will also continue to add new members and they would expand it to numerous jurisdictions in the next 12 months.