Crypto Travel Rule refers to new international regulations that largely prohibit transfer of cryptoassets unless accompanied by originator and beneficiary information.
From 1st of September 2023, you may not be able to send your cryptoassets unless you provide us with beneficiary, and in some circumstances also originator, information.
You can learn more about the Crypto Travel Rule by reading the rest of this article.
Also, keep an eye out for regular communications from us over the next few months as we lay out more details about how you will be expected to provide the required information in TrustVault.
You can always drop us a line by any of the usual means at any time to ask any questions you may have.
Travel Rule is a common term for the FATF Recommendation 16, which states that electronic fund transfers should be accompanied by recorded originator and beneficiary information. This recommendation has been adopted and enforced by over 200 jurisdictions i.e. every time you make an applicable transfer of money, behind the scenes banks exchange this information.
On 21st of July 2019, FATF clarified that cryptoassets are considered to be within scope of the recommendation, triggering jurisdictional enforcement legislation. Specifically for UK, HM Treasury’s Amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 Statutory Instrument 2022 consultation concluded on 14th of October 2021, paving the way for Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022, which stipulates cryptoassets transfers regulations in Part 7A that comes into force on the 1st of September 2023.
The regulation requires UK cryptoasset businesses a.k.a. Virtual Asset Service Providers (“VASPs”), that's cryptoasset exchange providers and custodian wallet providers, to collect and record originator and beneficiary information before transferring cryptoassets. Additionally, when transferring cryptoassets to a beneficiary’s wallet that’s hosted by another cryptoasset business, instead of to an unhosted wallet, to transmit that information onto that cryptoasset business.
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Date |
Event / Action |
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Sept 1st 2023 |
Travel Rule came into force. |
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Now and beyond |
Use the new Trust Vault Web transactions view and decide if you want to use the Travel Rule API. Review proposed API changes if applicable to you and get ready to implement any changes that may be required. |
DeFi transaction's counterparty is a smart contract, not a cryptoasset business, or an unhosted wallet. So it's neither an inter-cryptoasset business transfer, nor an unhosted wallet transfer, the two types of transfer to which the rules apply to.
To ensure that we comply with regulations as intended, we are seeking legal opinion as to whether the Crypto Travel Rule applies to DeFi transactions or not. Currently, our definition of in scope transactions are documented here.
The way in which transactions are created, approved and submitted to the network will be changing.
This diagram shows how you can currently use the TrustVault Components to create transactions
Currently the general flow is:
You send a transaction intent request
You have all required parties sign the transaction via the TrustVault app or via the Trust API
Bitpanda Custody signs the transaction
OPTIONAL: Bitpanda Custody submits the transaction to the network
This diagram shows how the new flow will introduce additional steps to comply with the Travel Rule regulations
The new flow will be:
You send a transaction intent request
If required(*), you send the required Travel Rule information for the transaction
Bitpanda Custody Compliance will review the information and approve the transaction
You have all required parties sign the transaction
Bitpanda Custody sign the transaction
OPTIONAL: Bitpanda Custody submit this transaction to the network
(*) Not all transfers are subject to Travel Rule. Details on included and excluded transfers will be announced later
Information is now required on some transfers into your accounts before you can make subsequent transactions with those assets.
This diagram shows how balances are currently calculated for your accounts
Currently there is nothing for you to do to receive new assets into your accounts. Whenever a new transaction is seen on the network which affects you, your balance is updated immediately.
This diagram shows how the new flow will introduce additional steps to comply with the Travel Rule regulations
The new flow will be:
A transaction is seen on the network which results in you receiving assets
If required(*), you submit Travel Rule information for the transfer of the assets
Bitpanda Custody Compliance will approve the transfer(s) of these assets
The balance is updated allowing you to spend the new assets
(*) Not all transfers are subject to Travel Rule. Details on included and excluded transfers will be announced later
We are still seeking guidance on specifics but currently the Travel Rule will affect the following transactions:
See our Travel Rule help articles and in particular the How do I submit Travel Rule information article.
If you are an API user, you can supply the required information using our updated APIs, instead of having to use the web app.
See the New Endpoint for Travel Rule article for full details.
In the future, we also aim to extend our "Address Book" to allow storage of the required information alongside existing data, so that when you select an address book entry, the details are auto-populated.
Additionally, we are expecting to make some significant changes to our APIs to support Travel Rule workflows. More details can be found on our Trust API future architecture changes article.
Finally, we are exploring options to support automated solutions like the Travel Rule Protocol. For example, the beneficiary will send to the originator a Travel Address provided to them by their cryptoasset business, which they will enter into a new section of the “New Transaction” form, instead of the beneficiary information and a wallet address. Behind the scenes, we will exchange the required information with the beneficiary’s cryptoasset business.
Table below summarises the information requirements under various circumstances as defined by FA:
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Natural Person (I) |
Legal Person (II) |
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(1) All transfers |
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(A) |
the name of the beneficiary; and |
the registered name of the beneficiary (or if there is no registered name, the trading name); and |
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(B) |
the account number of the beneficiary (or if there is no account number, the unique transaction identifier) |
the account number of the beneficiary (or if there is no account number, the unique transaction identifier) |
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(2) Transfers of your client’s cryptoassets versus your own, also |
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(C) |
the name of the originator; and |
the registered name of the originator (or if there is no registered name, the trading name); and |
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(D) |
the account number of the originator (or if there is no account number, the unique transaction identifier) |
the account number of the originator (or if there is no account number, the unique transaction identifier) |
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(3) Transfers to a hosted wallet versus unhosted, also |
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(E) |
the cryptoasset business hosting beneficiary’s wallet |
the cryptoasset business hosting beneficiary’s wallet |
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(4) Transfers of > 1000 EUR or if requested by beneficiary’s cryptoasset business, also |
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(F) |
the customer identification number of the originator (or the individual’s address; or the individual’s birth certificate number, passport number or national identity card number; or the individual’s date and place of birth.) |
the customer identification number of the originator (or the address of the originator’s registered office, or, if different, or if there is none, its principal place of business) |
(1) When sending your own assets, we can use information you supplied to us during onboarding to automatically populate the originators information, saving you time.
(2) As a cryptoasset business, you should be able to extract the originator information from the information your customers supplied to you during their onboarding with you. As for beneficiary information, you can request your customers to supply it to you as part of the transfer instruction. You will then be in a position to pass both the originator and beneficiary information on to us.
(3) Supply of the hosting cryptoasset business name is not a legal requirement, however, not supplying this information to us may result in cryptoassets being returned. For example, if we would classify a transfer as one to a self-hosted wallet due to lack of host information, we would capture the information, but not send it on to the beneficiary’s cryptoasset business. When the beneficiary’s cryptoasset business receives the cryptoassets, they will have to delay making the cryptoasset available to the beneficiary, as they would not have the necessary originator and beneficiary information. They may ask the beneficiary to identify the originator’s cryptoasset business and contact them, or they may simply choose to send the cryptoassets back.
Live Q&A with the MD of Bitpanda Custody, Alex Batlin, and our Head of Engineering, Paul Yardley, as they talk all things Travel Rule and how this will impact you:
“Beneficiary cryptoasset business” means the cryptoasset business which receives the cryptoasset transfer from the ordering cryptoasset business directly or through an intermediary cryptoasset business and makes the cryptoassets available to the beneficiary;
“Beneficiary intermediary cryptoasset business” means an intermediary cryptoasset business acting on behalf of the beneficiary cryptoasset business;
“Beneficiary” means the intended recipient of a cryptoasset from an originator;
“Cryptoasset business” means a cryptoasset exchange provider or a custodian wallet provider;
“Cryptoasset exchange provider” means is a firm or sole practitioner who by way of business provides one or more of the following services, including where the firm or sole practitioner does so as creator or issuer of any of the cryptoassets involved, when providing such services as exchanging, or arranging or making arrangements with a view to the exchange of, cryptoassets for money or money for cryptoassets; exchanging, or arranging or making arrangements with a view to the exchange of, one cryptoasset for another; or operating a machine which utilises automated processes to exchange cryptoassets for money or money for cryptoassets;
“Cryptoasset transfer” means an inter-cryptoasset business transfer or an unhosted wallet transfer;
“Cryptoasset” means a cryptographically secured digital representation of value or contractual rights that uses a form of distributed ledger technology and can be transferred, stored or traded electronically, and for the purposes of the definition of a cryptoasset exchange provider includes a right to, or interest in, the cryptoasset;
“Custodian wallet provider” means a firm or sole practitioner who by way of business provides services to safeguard, or to safeguard and administer cryptoassets on behalf of its customers; or private cryptographic keys on behalf of its customers in order to hold, store and transfer cryptoassets, when providing such services.
“Inter-cryptoasset business transfer” means a transaction carried out by two or more cryptoasset businesses which involves the making available of a cryptoasset of an originator to a beneficiary, provided that at least one of the cryptoasset businesses involved in the transaction is carrying on business in the United Kingdom in respect of the transaction (whether that is a cryptoasset business acting for the originator or a cryptoasset business acting for the beneficiary or an intermediary cryptoasset business);
“Intermediary cryptoasset business” means a cryptoasset business which, in the course of an inter-cryptoasset business transfer is not acting for the originator or the beneficiary; and receives and transmits a cryptoasset on behalf of a cryptoasset business;
”Intermediary payment service provider” (“IPSP”) means “intermediary cryptoasset business”;
“Legal person” means an entity or body which has an existence separate and distinct from the persons (legal or natural) comprising that entity or body e.g. a firm/company.
“Money or value transfer service” (“MVTS”) means “cryptoasset business”;
“Natural person” means a living human being;
“Ordering cryptoasset business” means the cryptoasset business which initiates the cryptoasset transfer and transfers the cryptossets upon receiving the request for a cryptoasset transfer on behalf of the originator;
“Ordering intermediary cryptoasset business” means an intermediary cryptoasset business acting on behalf of the ordering cryptoasset business;
“Originator” means a person who owns a cryptoasset and allows a transfer of that cryptoasset;
“Travel rule protocol” ("TRP") means an open protocol to implement the FATF’s Travel Rule for Virtual Assets;
“Unhosted wallet transfer” means the transfer of a cryptoasset either by an originator from an unhosted wallet to the cryptoasset business of a beneficiary; or by the cryptoasset business of the originator to the unhosted wallet of a beneficiary, with a view to making the cryptoasset available to the beneficiary;
“Unhosted wallet” means software or hardware that enables a person to store and transfer a cryptoasset on their own behalf, and in relation to which a private cryptographic key is administered by that person;
“Unique transaction identifier” means the combination of letters, numbers or symbols determined by a cryptoasset business which permits the traceability of the transaction from the originator to the beneficiary;
“Virtual asset service Provider” (“VASP”) means “cryptoasset business”;
“Virtual asset” means “cryptoasset”;
“Working day” means any day other than a Saturday, a Sunday, Christmas Day, Good Friday or a day which is a bank holiday under the Banking and Financial Dealings Act 1971(7) in any part of the United Kingdom;
Table below lists all VASPs we are currently conducting due diligence checks in partnership with Sumsub:
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Bitcoin.DMM |
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