As humans, it’s really important for us to make mistakes and then take concrete lessons from them. However, this setup comes with a huge, and more often than not, overlooked caveat. You see, while mistakes are integral to our individuality, we must have an idea about what mistakes we can actually afford. Alongside their long-term value, your errors also come with a certain cost, and if that cost happens to be high, you are better off practicing some prevention. Such a dynamic can be proven through many different ways, but its strongest backing comes from our regulatory framework. When the world wasn’t quite able to understand the said risk-reward ratio, it brought dedicated regulatory bodies into the fold, thus creating a safer environment throughout the spectrum. Now, while the move rightfully felt like a home-run, it did introduce a unique set of challenges. For instance, we’ll soon realize that complying with the established rules was, in all honesty, way tougher than we initially thought. In fact, the gazillion complex obligations would soon start prompting people to bypass regulations altogether. Nevertheless, the world will get a resolution for this problem once technology turns up on the block. So far, we have witnessed a ton of benefits to emerge from technology’s entry in the regulatory sphere, and yet the progress is still trickling in. A testament for the said progress was put-forth by some crypto giants’ recent decision.
Coinbase, BlockFi, Gemini, Robinhood, and many other crypto firms have jointly announced that they are working together to build a travel rule compliance platform. Named as Travel Rule Universal Solution Technology (Trust), the new system will be designed to fulfill disclosure requirements in relation with information like customer names, account numbers, and transaction date. Notably enough, the system doesn’t store any personal data whatsoever. Furthermore, it also offers a setup where the receiving exchange can prove it’s the lawful owner of the receiving crypto address, thus contributing immensely towards information’s credibility. If we focus on the holistic impact, Trust will help these companies in regards to meeting critical anti-money laundering, security, and privacy requirements.
“What makes TRUST unique is it’s the most industry-wide solution to the problem,” he said. “It’s an excellent example of the industry actually coming together to solve these problems on its own,” said Paul Grewal, Chief Legal Officer of Coinbase.
The move arrives after Financial Crimes Enforcement Network (FinCEN) proposed that U.S. Treasury’s travel rule, which has been in place since 1996, should cover cryptocurrency transactions as well.