According to a report by Cointelegraph, the Crypto Travel Rule, which came into effect on September 1st, requires crypto asset businesses and virtual asset service providers (VASPs) in the UK to halt certain crypto transfers in order to prevent negative activities such as money laundering and terrorist financing.
Tighter Oversight for UK Virtual Asset Service Providers
The Financial Conduct Authority (FCA) announced these rules on August 17th, implementing regulations that enforce stricter monitoring of crypto asset transfers by UK-based Virtual Asset Service Providers (VASPs). These regulations mandate VASPs to collect, verify, and share customer information during crypto transfers.
Same Rules Apply for Outgoing Payments
Additionally, if a VASP receives a payment from an individual or entity abroad that does not adhere to the Crypto Travel Rule, the VASP will need to conduct a “risk-based assessment” on whether to grant access to the “beneficiary’s use of crypto assets.” The same rules are also applicable for cases where UK citizens intend to send payments abroad.
During the implementation process, challenges such as coordinating cross-border information exchange continue to be prominently highlighted.
“Tracking cross-border transfers will be quite challenging, especially in the beginning.”
Ian Andrews, Marketing Director of Chanasis
Ultimately, the primary aim of this regulation is to assist organizations operating in the crypto sector in preventing financial crimes and negative activities, thereby enhancing transparency and security within the industry. Moreover, the implementation of the Crypto Travel Rule is expected to further strengthen the regulatory framework for the crypto asset sector in the UK.
