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Please familiarize yourself with the Travel Rule here.
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History
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Overview
Implementation of the EU Travel Rule builds upon the following documents issued by EU regulators:
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View file name CELEX_32023R1113_EN_TXT.pdf View file name Travel Rule Guidelines.pdf
History
The EU Travel Rule regulation became effective in the EU on January 1, 2025. The regulation applies whether you are a MiCA regulated VASP - or not. The driving force behind this regulation was AML (anti-money laundering) efforts triggered by the war in Europe between Russia and Ukraine, and the fact that the adoption of cryptocurrency and related services will grow in the EU when the MiCA regulation becomes fully effective.
Key concepts in EU regulation
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Examples: BUY - cash to crypto | |||
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Customer (Payer) inserts cash into the crypto-ATM machine and scans the destination wallet address. | |||
BUY | destination addressDestination Address: | Classification: | Example: |
Scenario A |
| CASP to CASP transfer. CASP is required to send the Envelope to the beneficiary’s CASP. | Customer inserts cash and wants his coins to go to his wallet on Binance exchange. |
Scenario B |
| CASP to self-hosted wallet transfer. CASP needs to perform best effort to confirm the address is not hosted. | Customer inserts 100 EUR in cash and wants his coins to go to his mobile Trust wallet that has private keys in his mobile phone. |
Scenario C |
| CASP to self-hosted wallet transfer. CASP needs to perform best effort to confirm the address is not hosted. CASP should require proof of ownership/control over the wallet. | Customer inserts 1000 EUR in cash and wants his coins to go to his mobile wallet that has private keys in his mobile phone. CASP will require him to provide cryptographic proof. |
Examples: SELL - crypto to cash | |||
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Customer (Payee) selects amount he wants to withdraw on the ATM and prints a redeem ticket. Customer or somebody else sends coins to a wallet address on a redeem ticket that belongs to the BATM Operator (CASP). | |||
SELL- originating | Origination addressis: | Classification: | Example: |
Scenario D |
| CASP to CASP transfer. CASP is required to receive PII from originating CASP. | Customer sends coins to you from his Binance account. |
Scenario E |
| Self-hosted wallet to CASP transfer. CASP needs to perform best effort to confirm the address is unhosted. | Customer sends coins worth of 100 EUR from his mobile Trust wallet that has private keys in his mobile phone. |
Scenario F |
| Self-hosted wallet to CASP transfer. CASP needs to perform best effort to confirm the address is unhosted. | Customer inserts 1000 EUR in cash and wants his coins to go to his mobile wallet that has private keys in his mobile phone. CASP will require him to provide cryptographic proof. |
Practical Recommendations for Operators
We recommend that you reinforce that the Payee & Payer are the same person via in your Terminal’s Terms and Conditions.
This reduces the risk that the customer is sending coin to a scammer.
Additionally, your customer is not required to fill additional information about the Payee which can be time consuming and a barrier to usability.
We recommend that you force customers to be issued a PDF paper wallet at the ATM BATM for transactions that exceed 1000 EUR.
Currently, most mobile and desktop wallets have not yet implemented a means to perform proof of ownership. You cannot comply if they cannot comply, but regulators do not care about that.
The Travel Rule Provider network is immature. Be prepared for compliance struggles in 2025.
Travel Rule Providers connect multiple providers into their network. However these These networks are not interconnected (yet). It will take years for Travel Rule Providers to achieve interoperability.
Expect that counterpart CASPs will not receive your messages and you will not receive theirs.
Be discoverable.
Register yourself as a CASP to multiple registrars to be found by other CASPS.
Write your CASP ID on customer receipts including your Organization’s country of origin.
Be prepared for authorities to review whether you are archiving PIIs/Envelopes for 5 years.
Apply existing KYC measures to ensure that your customers are not avoiding Travel Rule restrictions by performing multiple cryptocurrency transfers below 1000 EUR.
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Version 20241001 - Delivered
PDF paper wallet support has been added allowing operators to test drive a new vehicle for how to send coins to customer self-hosted wallets, with the proof of ownership requirement satisfied.
Releasing PDF support ahead of time gives operators time to customize their PDF wallet templates to better explain to customers how to use them.
Version 20241101 - Delivered
Input Queues were introduced. Input Queues allow operators to review or suspend incoming coin transfers. This feature is an essential tool for KYC review when the PII from the originator’s CASP hasn’t arrived yet.
Version 20241201 - Delivered
Added support for scenarios B and C. General Bytes has concentrated on supporting and improving usability for these scenarios first - as it is expected that CASP to CASP Travel Rule Providers will be facing significant interoperability and usability issues at the beginning of 2025.
Version 20241201 - Delivered
Added support for customer is declaring that his wallet is unhosted for transactions bellow below threshold (1000 EUR for example).
Version 20250101
Added support for scenario A using NotaBene travel rule provider.
Added Extensions API to add your own Travel Rule Provider implementation.
Version 20250201
Added support for scenario D,E,F using NotaBene travel rule provider.
Version 20250301