Just before the Financial Action Task Force (FATF) released the organization’s 12-month review, a working group called the Travel Rules Protocol (TRP) released its version 2.0 of the TRP Encrypted Application Programming Interface (API) to “Simplify the end-user encrypted exchange experience.” TRP is supported by major banks such as Fidelity Investments, Standard Chartered Bank and ING Bank, and 25 virtual currency service providers (VASP).
The encryption working group focusing on travel rules releases protocol version 2.0
The Travel Rules Protocol (TRP) is an organization that aims to enhance encrypted financial transaction data to comply with KYC/AML policies. The organization is supported by large financial institutions and cryptocurrency exchanges, as well as custodians such as Bitgo, Coinbase, Kraken, and Gemini.
The Travel Rules Agreement (TRP) was announced last year, when 25 US VASPs published a paper showing how companies are committed to complying with FATF travel rules. The organization also released TRP encrypted application programming interface (API) version 1.0, which is a solution for any organization to identify data related to encrypted transactions and meet the requirements of FATF-based travel rules.
This week, the TRP team released version 2.0 of the protocol and claimed that the solution was “built on [the] The previous Travel Rule Protocol version 1.1.0 solved the “discoverability” problem by adding an easy-to-use workflow for end users. In addition, TRP 2.0 provides a direct way for VASP to “comply with FATF recommendations without imposing additional burdens on end users.”
The organization believes that VASP can easily integrate the implementation of the TRP API into their existing framework. “Many members of the TRP working group have created implementations of the TRP API that can be used immediately,” the announcement stated.
“For the TRP working group, the end user experience is as simple as possible, which is very important for the TRP working group, and it will not be more difficult than the typical existing pre-travel rules industry practices,” said Andrew Davidson, chairman of the TRP working group Said in a statement. “We decided to adopt a workflow based on the existing LNURL standard, which is a bech32-encoded query string from the Lightning Network. This solution can be used for any virtual asset and provides great flexibility for VASP. Customize it for your needs while making the solution easy to implement or adopt.” Davidson continued:
Through the LNURL-based workflow, we allow end users to get almost the same user experience as they are used to using existing virtual asset platforms, while complying with FATF recommendations and bypassing the complexity of VASP discoverability.
“TRP protects customers from criminal third parties”
“Travel Rules” is basically a descriptive label for Bank Secrecy Act (BSA) rules [31 CFR 103.33(g)]The rule basically requires all financial companies to pass the transmission data such as KYC/AML to the next financial institution. The financial regulator explained: “The fund transfer rules are designed to help law enforcement agencies detect, investigate, and prosecute money laundering and other financial crimes by retaining clues about people who send and receive funds through the fund transfer system.”
The FATF’s 12-month review of virtual assets (VA) and VASP emphasized that the use of “anonymity strategies” and the “lack of effective” supervision continue to plague the cryptocurrency industry. If the 2.0 protocol API of the TRP Working Group meets the FATF’s recommendations, it may follow the “specified threshold, the threshold required for VASP to conduct customer due diligence is 1,000 USD/EUR”.
“The latest update of TRP 2.0 enables us and the entire virtual asset ecosystem to provide safer services and protect our customers from third-party criminals,” said Christopher Kiew-Smith, Chief Compliance Officer of TRP member company Zodia. Say.
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