{"id":1960,"date":"2019-12-22T00:00:46","date_gmt":"2019-12-22T00:00:46","guid":{"rendered":"http:\/\/sygna.io\/?p=1960"},"modified":"2020-02-07T08:22:21","modified_gmt":"2020-02-07T08:22:21","slug":"why-should-vasps-comply-with-the-fatfs-travel-rule-recommendation-16","status":"publish","type":"post","link":"https:\/\/www.sygna.io\/jp\/blog\/why-should-vasps-comply-with-the-fatfs-travel-rule-recommendation-16\/","title":{"rendered":"Why Should VASPs Comply with the FATF&#8217;s R.16 &#8220;Travel Rule&#8221;?"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\">Contents<\/h2>\n\n\n\n<ul class=\"wp-block-list\"><li><strong><a href=\"#howdoes\">How does the R.16 &#8220;Travel Rule&#8221; impact VASPs?<\/a><\/strong><\/li><li><strong><a href=\"#whatare\">What are the FATF\u2019s Travel Rule expectations of countries and VASPs?<\/a><\/strong><\/li><li><strong><a href=\"#whyshould\">Why should VASPs comply with the Travel Rule?&nbsp;<\/a><\/strong><\/li><li><strong><a href=\"#happens\">What will happen if VASPs don\u2019t adhere to the Travel Rule?<\/a>&nbsp;<\/strong><\/li><li><strong><a href=\"#whatbenefits\">What are the benefits for VASPs to comply with the Travel Rule?<\/a><\/strong><\/li><li><strong><a href=\"#con\">Conclusion<\/a><\/strong><\/li><\/ul>\n\n\n\n<p>\u00a0The Financial Action Task Force (FATF)&#8217;s recently updated Recommendation 16 in June 2019 is frequently monikered by the media as the &#8220;Crypto Travel Rule&#8221;, in reference to the U.S.\u2019 Bank Secrecy Act (BSA)&#8217;s established traditional banking regulation. Its information-sharing requirements present a difficult hurdle for VASPs to cross, where non-compliance could have severe regulatory repercussions.\u00a0<\/p>\n\n\n\n<p>For virtual asset service providers (VASPs), complying with the new R.16 regulation as adapted in the FATF&#8217;s  <a href=\"https:\/\/www.fatf-gafi.org\/publications\/fatfrecommendations\/documents\/guidance-rba-virtual-assets.html\">Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers<\/a> guidance is a double-edged sword.  Compliance alienates its more libertarian user base likely to see it as a capitulation to government interference and a sign to move their virtual assets elsewhere more private. \u00a0On the other hand,  compliance opens the gates to traditional financial markets as well as the legal certainty needed to look at assets like Bitcoin as a secure long-term investment.  In this article, we look at why it&#8217;s in VASPs&#8217; best interest to comply with Recommendations 16.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"howdoes\"><strong>How does the R.16 &#8220;Travel Rule&#8221; impact VASPs?<\/strong><\/h3>\n\n\n\n<p>The <a href=\"https:\/\/www.sygna.io\/en\/blog\/what-is-fatf-recommendation-16-for-vasps\/\">FATF\u2019s well-known 40 Recommendations<\/a> are non-binding guidances that help the G20 watchdog to create a uniform and cohesive global Anti-Money-Laundering (AML) and Combating-Funding-Terrorism (CFT) policy. The FATF doesn\u2019t target or prosecute individual transgressors but focuses instead on creating and then disseminating its policies worldwide to its 39 member jurisdictions and extended network of 9 FATF-Style Regional Bodies (FSRBs).\u00a0<\/p>\n\n\n\n<p>The Task Force cleverly puts the <a href=\"https:\/\/www.sygna.io\/en\/blog\/who-must-comply-with-fatf-recommendation-16-crypto-travel-rule\/\">onus on its 200+ member countries <\/a>to ensure that their local VASPs are compliant with its latest recommendations, also known as the FATF Standards. If not, they reserve the option to punish the countries in which a VASP is incorporated, by adding them to a high-risk monitoring list (greylist) or non-compliance list (blacklist). <\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"whatare\"><strong>What are the FATF\u2019s expectations of countries and VASPs?<\/strong><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><strong><a href=\"http:\/\/www.fatf-gafi.org\/publications\/virtualassets\/documents\/virtual-assets-fatf-standards.html?hf=10&amp;b=0&amp;s=desc(fatf_releasedate)\">According to the FATF<\/a>, countries need to:\u00a0<\/strong><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li>Understand the money laundering and terrorist financing risks the sector faces<\/li><li>License or register virtual asset service providers<\/li><li>Supervise the sector the same it does with other financial institutions<\/li><\/ul>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><a href=\"http:\/\/www.fatf-gafi.org\/publications\/virtualassets\/documents\/virtual-assets.html?hf=10&amp;b=0&amp;s=desc(fatf_releasedate)\"><img decoding=\"async\" src=\"https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124-05-1030x761.png\" alt=\"The FATF's expectations of countries \" class=\"wp-image-2151\" width=\"854\" height=\"631\" srcset=\"https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124-05-1030x761.png 1030w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124-05-300x222.png 300w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124-05-768x567.png 768w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124-05-1536x1134.png 1536w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124-05-2048x1512.png 2048w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124-05-1500x1108.png 1500w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124-05-705x521.png 705w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124-05-450x332.png 450w\" sizes=\"(max-width: 854px) 100vw, 854px\" \/><\/a><figcaption>The FATF&#8217;s expectations of countries <a href=\"http:\/\/www.fatf-gafi.org\/publications\/virtualassets\/documents\/virtual-assets.html?hf=10&amp;b=0&amp;s=desc(fatf_releasedate)\">(FATF website)<\/a><\/figcaption><\/figure><\/div>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>Virtual asset service providers need to:&nbsp;<\/strong><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li>Implement the same preventive measures as financial institutions, including customer due diligence, record keeping and reporting of suspicious transactions<\/li><li>Obtain, hold and security transmit originator and beneficiary information when making transfers<\/li><\/ul>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><img decoding=\"async\" src=\"https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124_article-\u8907\u672c-1-1030x790.png\" alt=\"\" class=\"wp-image-2173\" width=\"939\" height=\"720\" srcset=\"https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124_article-\u8907\u672c-1-1030x790.png 1030w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124_article-\u8907\u672c-1-300x230.png 300w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124_article-\u8907\u672c-1-768x589.png 768w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124_article-\u8907\u672c-1-1536x1178.png 1536w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124_article-\u8907\u672c-1-2048x1570.png 2048w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124_article-\u8907\u672c-1-1500x1150.png 1500w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124_article-\u8907\u672c-1-705x540.png 705w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124_article-\u8907\u672c-1-450x345.png 450w\" sizes=\"(max-width: 939px) 100vw, 939px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"happens\"><strong>What will happen if VASPs don\u2019t comply with the Travel Rule?&nbsp;<\/strong><\/h3>\n\n\n\n<p>While VASPs won\u2019t get an automatic red card from the FATF directly, they can expect a swift and strong response from domestic, regional and global regulators.&nbsp;<\/p>\n\n\n\n<p>The FATF will not deviate from its mission to ensure AML\/CFT compliance in the crypto industry.  The graphic below, provided by the FATF, illustrates why. Without real-name checks, it is a simple rinse-and-repeat process for bad actors to steal cryptocurrencies or receive it as part of criminal activities, then send it to VASPs to get \u201ccleaned\u201d, after which it is converted into fiat currency.\u00a0<br><\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><img decoding=\"async\" src=\"https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Wannacry-Chartai-03-589x1030.png\" alt=\"\" class=\"wp-image-2234\" width=\"1327\" height=\"2322\" srcset=\"https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Wannacry-Chartai-03-589x1030.png 589w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Wannacry-Chartai-03-172x300.png 172w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Wannacry-Chartai-03-858x1500.png 858w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Wannacry-Chartai-03-403x705.png 403w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Wannacry-Chartai-03-450x787.png 450w\" sizes=\"(max-width: 1327px) 100vw, 1327px\" \/><\/figure><\/div>\n\n\n\n<p>While it\u2019s now clear how the FATF sees the future of cryptocurrencies, the same cannot be said for individual countries, who are all struggling to untangle the benefits of blockchain technology from the vices of cryptocurrency misbehavior.\u00a0Running the risk of a FATF demotion for protecting the rights of ( or turning a blind eye to) unregulated financial institutions operating in an industry barely worth $200 billion at the time of writing, simply won\u2019t add up for most countries.<\/p>\n\n\n\n<p>Countries will therefore make it a priority to ensure that VASPs in their jurisdictions are either fully compliant with the FATF\u2019s AML\/CFT regulations by the FATF&#8217;s June 2020 deadline or don\u2019t exist at all in their jurisdictions. China, the current FATF president, is leading from the front in this regard, with its recent <a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2019-11-27\/all-you-need-to-know-about-china-s-latest-crypto-crackdown\">crackdown on cryptocurrencies <\/a>set to continue unabated for the foreseeable future.<\/p>\n\n\n\n<p>In March 2019 there were <a href=\"https:\/\/cryptonews.com\/guides\/countries-in-which-bitcoin-is-banned-or-legal.htm\">less than 20 countries<\/a> in the world where Bitcoin ownership was either illegal or restricted. There is a real risk that this number of countries will shoot up if a suitable Travel Rule solution isn&#8217;t found in 2020. <\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img decoding=\"async\" width=\"1030\" height=\"551\" src=\"https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124-07-1030x551.png\" alt=\"Bitcoin ownership in 2019 \" class=\"wp-image-2163\" srcset=\"https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124-07-1030x551.png 1030w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124-07-300x160.png 300w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124-07-768x411.png 768w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124-07-1536x821.png 1536w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124-07-2048x1095.png 2048w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124-07-1500x802.png 1500w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124-07-705x377.png 705w, https:\/\/www.sygna.io\/wp-content\/uploads\/2019\/12\/Article1124-07-450x241.png 450w\" sizes=\"(max-width: 1030px) 100vw, 1030px\" \/><figcaption><a href=\"https:\/\/cryptonews.com\/guides\/countries-in-which-bitcoin-is-banned-or-legal.htm\">Bitcoin ownership in 2019 (source: cryptonews)<\/a><\/figcaption><\/figure><\/div>\n\n\n\n<p>Where countries have any doubt about their exposure to money laundering and terrorism funding due to cryptocurrencies, the easiest avenue for them could very well be to ban cryptocurrencies altogether or penalize them into bankruptcy.\u00a0<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"whyshould\">Why should VASPs comply with the Travel Rule?&nbsp;<\/h3>\n\n\n\n<p>For a virtual asset service provider, complying with \u201cinvasive\u201d regulations is a double-edged sword. While on the one hand compliance opens the gates to a potentially much bigger audience as well as long-term legal certainty, it also alienates its more hardcore libertarian-minded cryptocurrency user base, who will see exchanges\u2019 compliance drives as a capitulation to government interference and a clear sign to move their virtual assets underground to a more private location.&nbsp;<\/p>\n\n\n\n<p>Despite this, it\u2019s not a tough choice to make, in fact, it\u2019s hardly a choice at all. Regulations will force exchanges to comply or face extinction.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"whatbenefits\"><strong>What benefits are there for VASPs to comply with the Travel Rule?&nbsp;<\/strong><\/h3>\n\n\n\n<p>Taking a glass-half-full, longer view of regulations like Recommendation 16, there seem to be plenty of reasons why VASPs should willingly comply with the Travel Rule, not only because of an existential threat to their business operations.\u00a0<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"beingin\">Being in the FATF\u2019s good graces opens up new markets worldwide<\/h4>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/lh3.googleusercontent.com\/MUk-n42XuMfgFtKUfHwwADNnoPN1U6UmYQwYdpjG--qDGLicCy9nmC4CPoFVp7wqkafi79lZJ42yGsYG8ZuDeo_9qQbaQn13ONNbbYq837JOXUIfC4mB2jH-qWv5hxE700Yh8z4w\" alt=\"The FATF-Style Regional Bodies (FSRBs)\" width=\"876\" height=\"444\"\/><figcaption><a href=\"https:\/\/commons.wikimedia.org\/wiki\/File:FATF_FSRBs_map.png\">The FATF-Style Regional Bodies (FSRBs)<\/a><\/figcaption><\/figure><\/div>\n\n\n\n<p>Since 2018, regulatory and governmental giants such as the FATF (global), CFTC, SEC and FinCEN have started to make it clear that the unregulated era of virtual assets is coming to an end. <a href=\"https:\/\/www.fincen.gov\/sites\/default\/files\/2019-05\/FinCEN%20Guidance%20CVC%20FINAL%20508.pdf\">New definitions on money service businesses (MSBs), and convertible virtual currencies (CVC)<\/a>, virtual assets (VA) and VASPs has led to the <a href=\"https:\/\/www.fincen.gov\/news\/news-releases\/fincen-penalizes-peer-peer-virtual-currency-exchanger-violations-anti-money\">increasing prosecution of individuals<\/a>. A recent combined statement by the <a href=\"https:\/\/www.sec.gov\/news\/public-statement\/cftc-fincen-secjointstatementdigitalassets\">SEC, FinCEN and CFTC<\/a> showed a united front against crypto money laundering and terrorism financing. <\/p>\n\n\n\n<p>It stands to reason that being on the good side of the FATF and FinCEN, the world\u2019s two biggest AML\/CFT organizations (mandated respectively by the G20 and the U.S.) will have the knock-on effect that VASPs meet the regulatory standards elsewhere in the world, at least the most stringent ones. This could greatly reduce the red tape for VASPs when undergoing due diligence and opening bank accounts in certain countries still resistant to crypto exchanges. <\/p>\n\n\n\n<p>While new challenges such as the European Union\u2019s<a href=\"https:\/\/coingeek.com\/cryptocurrencies-facing-stringent-guidelines-across-eu\/\"> Fifth Money Laundering Directive<\/a> (5MLD), which becomes official in January 2020, demonstrate the gradual and iterative evolution that crypto regulation will undergo in the coming decade, complying with the FATF&#8217;s most pressing regulations is a great way to start. <\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"accessto\"> Access to regular financial services such as bank accounts<\/h4>\n\n\n\n<p>There&#8217;s significant distrust between VASPs and traditional financial institutions, who view them as risky business partners that operate in murky legal waters. To protect themselves, FI&#8217;s often deny exchanges critical financial services, as can be seen in the recent withdrawal of services from Korea to <a href=\"https:\/\/www.luno.com\/blog\/en\/post\/statement-on-proposed-fnb-bank-account-closure\">South Africa<\/a>, both previously friendly to law-abiding exchanges. Potentially up to <a href=\"https:\/\/ethereumworldnews.com\/97-of-south-korean-cryptocurrency-exchange-in-danger-of-shutting-down-report\/\">97% of Korean exchanges<\/a> are in danger of closing due to a lack of cooperation from domestic banks.\u00a0<\/p>\n\n\n\n<p>The FATF believes that by implementing its regulations, VASPs will be able to foster more trust in blockchain technology as a <a href=\"http:\/\/www.fatf-gafi.org\/publications\/virtualassets\/documents\/virtual-assets.html?hf=10&amp;b=0&amp;s=desc(fatf_releasedate)\">\u201crobust and viable means to transfer value\u201d<\/a> and can eventually expect to be afforded the same status and privileges that are afforded to regular financial institutions.\u00a0<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"betterreputation\">Better reputation, more investment<\/h4>\n\n\n\n<p>Having all their regulatory ducks in a row will greatly polish a VASP\u2019s reputation as a safe investment destination for both institutions and individual investors. No longer concerned with unknowingly rubbing shoulders and intermingling their funds with that of money launderers and terrorists, financial institutions will be able to invest in VASPs with confidence.\u00a0<\/p>\n\n\n\n<p>Over the last 18 months, a dozen Bitcoin exchange-traded fund (ETF) proposals have been submitted with the hopes of getting the blessing of the  U.S. Securities and Exchange Commission (SEC). Each application has been delayed or rejected, often resulting in major Bitcoin price movement.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/lh4.googleusercontent.com\/ymnXc7qfmS9PcnaecngwRld6cTUxDHU8abu12rh_rdupGjZwjV5PIjShFOKDJHKKX_sk6e8klN4mutbecUkr8HeaDpphHmKa-YHP5DvVRzruFqyeIZgQJ2oASsDbR3jJbW_es0xH\" alt=\"Failed Bitcoin ETF History till end of 2018\" width=\"1054\" height=\"1417\"\/><figcaption><a href=\"https:\/\/cointelegraph.com\/news\/sec-continues-to-stall-on-btc-etfs-all-in-wait-for-breakthrough\">Failed Bitcoin ETF applications history <\/a>(end of 2018)<\/figcaption><\/figure><\/div>\n\n\n\n<p>In October 2019, within its <a href=\"https:\/\/www.sec.gov\/rules\/sro\/nysearca\/2019\/34-87267.pdf\">112-page long disapproval<\/a> of the Bitwise ETF proposal, the SEC finally provided the reasoning behind their decisions.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><em>\u201cBecause, among other things, the Sponsor has asserted that 95% of the bitcoin spot market consists of fake and non-economic activity, but has not established that it has, in fact, identified the \u201creal\u201d bitcoin market, or that the \u201creal\u201d bitcoin market is isolated from the fraudulent and manipulative activity, we find, in each case, that NYSE Arca has not met its burden to demonstrate that its proposal is consistent with the requirements of Exchange Act Section 6(b)(5), and therefore the Commission disapproves this proposed rule change.\u201d<\/em><\/p><cite><strong><em>SEC October 2019- Bitwise\/NYSE ARCA ruling<\/em><\/strong><br><\/cite><\/blockquote>\n\n\n\n<p>In short, the SEC\u2019s biggest crypto gripe is the rife market manipulation, confirmed by Bitwise\u2019s research that indicated 95% of current crypto trading volumes are fake. Coupled with the liquidity problems that most virtual assets and exchanges are dealing with, the SEC felt strongly that the Bitcoin market was not mature enough yet for an officially approved ETF.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"greenlightto\">Greenlight to create crypto-based financial instruments<\/h3>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/lh6.googleusercontent.com\/JGGGERdkwphSAbM8IilQI5fmB7hTrcQoTT3uBupV0HT-Txr6W3QCW5iVJzb19A3AHutn_UQANcRkAZ1FGLElMCNSvuYxCrwnRWX1f1ZAR1nJy5bIEY2vyjtkOxdCjPVHNIiJfMf1\" alt=\"green traffic light\"\/><figcaption>Source: newsbtc.com<\/figcaption><\/figure><\/div>\n\n\n\n<p><a href=\"https:\/\/www.coindesk.com\/what-to-make-of-the-secs-latest-bitcoin-etf-rejection\">Analysts interpreted this latest SEC rejection as<\/a> an implicit statement that a Bitcoin ETF could still be years away.\u00a0 There were however a few positive takeaways from the SEC\u2019s statement. The SEC\u2019s lengthy response meant that they had a serious deliberation on a Bitcoin ETF and confirmed they&#8217;re leaving a back door open, with their statement that a \u201csurveillance-sharing agreement between a regulated VASP and a bigger Bitcoin market (of \u201csignificant size\u201d) would ease its market manipulation concerns.\u00a0<\/p>\n\n\n\n<p>An SEC-approved Bitcoin ETF opens BTC to a much broader traditional investor base, and could lead to a massive influx of \u201cnew money\u201d investments and institutional funding into the cryptosphere. It will also help regulated financial institutions develop and successfully market more sophisticated and <a href=\"https:\/\/masterthecrypto.com\/what-is-cryptocurrency-derivatives-guide-crypto-derivatives\/\">crypto derivatives<\/a> such as options, swaps, and futures.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"bettersecurity\">Better security for exchanges<\/h3>\n\n\n\n<p>By complying with the Travel Rule, participating VASPs will benefit from improved security for exchange transactions and fund custody.\u00a0Any Travel Rule solution will likely create a type of global database of VASPs in order to help exchanges know who they\u2019re dealing with during transmittals and whether their counterpart meets the FATF Standards.\u00a0<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/lh5.googleusercontent.com\/DrgWtmuS95NEyaTQ8BieY5YNxf4Toth1aUTl4iFOTD8soZYfxwM2pGjlhtD8T8aOyaK2iBUvWGerTzU-ruFQchMgxXSvqfHOH0HZkSYztsWDIIiM5KctiP5tB2dKtTM28ynTFlzR\" alt=\"Exchanges hacked in the first half of 2019\" width=\"960\" height=\"653\"\/><figcaption><a href=\"https:\/\/cointelegraph.com\/news\/round-up-of-crypto-exchanges-hack-so-far-in-2019-how-can-it-be-stopped\">Exchanges hacked in the first half of 2019<\/a><\/figcaption><\/figure><\/div>\n\n\n\n<p>Also, bad actors will be less likely to transact on R.16-compliant exchanges, for fear of leaving a transaction trail that law enforcement might find. The same goes for hackers. Knowing that an exchange is able to share personally identifiable information with other exchanges and might freeze or block transactions, make exchanges riskier to target.\u00a0<\/p>\n\n\n\n<p>Being able to identify and connect with other trust-worthy VASPs will greatly help to fortify exchanges&#8217; resilience against hacks and scams and make it easier for them to reclaim stolen assets.  This is especially important when convincing authorities like the SEC to view crypto as favorable. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"con\">Conclusion<\/h3>\n\n\n\n<p>The FATF has indicated this year that due to the fast-moving nature of virtual asset technology, it will continue to evaluate the industry and take its next AML\/CFT-promoting steps in June 2020.&nbsp;This can be interpreted as a sign that the Travel Rule is only the first of more to come.&nbsp;<\/p>\n\n\n\n<p>By its own admission, the FATF isn\u2019t trying to regulate innovative technology such as virtual assets. In fact, the organization is <a href=\"https:\/\/www.commonplaces.com\/blog\/are-you-technology-agnostic\/\">technology agnostic<\/a> and has previously declared that it sees great potential in the ability of virtual assets to benefit the global population.&nbsp;Therefore, it\u2019s important for VASPs to create a constructive and objective discussion with regulators to make things easier not only in 2020, but in the decade to follow. <\/p>\n","protected":false},"excerpt":{"rendered":"<p>What are the benefits for virtual asset service providers (VASPs) to comply with the FATF&#8217;s R.16 Travel Rule&#8217;s information-sharing requirements?<\/p>\n","protected":false},"author":7,"featured_media":2167,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[19,37],"tags":[],"class_list":["post-1960","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-recommendation-16","category-blog-posts"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Why Should VASPs Comply with the FATF&#039;s R.16 &quot;Travel Rule&quot;? 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