By joining TRUST, PayPal has improved its regulatory compliance while streamlining its reporting requirements for the “travel rule” on digital assets.
With the addition of the crypto-friendly digital payments behemoth PayPal to the Travel Rule Universal Solution Technology (TRUST) network, some well-known crypto companies have followed the travel regulations for digital assets.
The announcement comes two months after the payments industry major launched infrastructure in June of this year that allowed users to send, receive, and move digital assets between PayPal and other wallets and exchanges. Before then, PayPal was the only place where consumers could purchase and sell cryptocurrencies after the company’s initial entry into the market in October 2020.
A consortium of 18 virtual asset service providers (VASPs) in the United States formed TRUST in February, with major players including Coinbase, Paxos, Circle, Kraken, and Robinhood taking part immediately. Since PayPal joined the group, the number has increased to 38.
PayPal Becoming A Crypto Heavy Hitter:
U.S. VASPs are legally compelled to disclose particular information on customer fund transfers from one financial institution to another under Bank Secrecy Act (BSA) rule 31, sometimes known as the “Travel rule.” A $1,000 threshold is used to begin tracking down the sources of fund transfers.
To streamline reporting and make information sharing between them simpler and more transparent, the organization of U.S. VASPs developed TRUST. To identify each VASP party on both ends of a transaction, TRUST uses a solution that consists of two primary features: an encrypted point-to-point (P2P) channel for data exchange and a central bulletin board.
The organization was created in response to the Financial Action Task Force’s (FATF) June 2021 proposal that all VASPs globally embrace certain standards to continue adhering to anti-money laundering (AML) and counter-terrorist financing (CTF) regulations.