In their ongoing fight against global money laundering, the Financial Action Task Force (FATF) has given out a new set of recommendations concerning cryptocurrency transfers between Virtual Asset Service Providers (VASPs). Under the FATF travel rule, VASPs must exchange personally identifiable information (PII) about both the sender and the receiver of a transaction, including their name, physical address, national ID number, birth date, and birthplace.
The new recommendations are a significant challenge for VASPs, such as cryptocurrency exchanges and other custodians. They need to exchange information that satisfies the FAFT and privacy regulations, such as the European GDPR. Additionally, PII owners should be aware that their private data is handed out to another VASP and should have the option to stop a transaction if they do not consent to exchange their data. Moreover, they need to control their data to avoid exposure of their PII on data marketplaces.
Shyft Network is a public blockchain protocol that allows network members to secure PII data and exchange them without ever taking control over sensitive data out of their owner’s hands. Veriscope is a compliance framework and smart contract platform built on top of Shyft, specifically designed to enable the secure exchange of data between VASPs in compliance with the FATF travel rule.
For this purpose, they are setting up a coalition of VASPs, which allows their members to instantly identify whether they need to invoke the travel rule for any given transaction. If this is the case, they conduct a series of cryptographic handshakes, establishing a secure off-chain communication channel for PII data exchange.
To explore solutions surrounding the FATF’s governance framework, Shyft has now announced the Veriscope Governance Task Force. The task force brings together some of the most critical global liquidity providers in the crypto space, including Huobi, Bitfinex, Tether, Binance, Hashkey Pro, Unocoin, Paycase Financial, TokoCrypto, and several other international exchanges, advisors, and contributors.
Headed by Rick McDonnell and Josee Nadeau, two former high-ranking FATF members, the Veriscope Governance Task Force, wants to work closely together to shape the interoperability between VASPs and provide coordination standards around the FATF’s compliance framework. To cite Joseph Weinberg, Co-Founder of Shyft Network:
“It is our responsibility to ensure we have a better voice to help direct policy and ensure we can maintain decentralization and user privacy while helping regulators gain comfort in how our ecosystem operates. This group will act as a collective to make decisions, run implementations, address interoperability challenges, and give insights into how we may be able to build regulatory requirements that reduce risk, rather than having guidance that doesn’t effectively solve regulatory challenges.”
Veriscope will be the world’s first self-governing compliance model for VASPs, says Chris Forrester, CTO of Shyft Network:
“This model allows global counterparties to onboard into the network, and maintain full sovereignty over their business requirements and compliance obligations. We don’t believe anyone can be precluded from accessibility, but rather the network participants should be given the tools to allow them to choose who they do business with. This formal governance policy eliminates Core developers from being able to dictate who is “good” and “bad” and leaves those decisions up to VASP’s globally, while also providing a baseline for how counterparties are expected to share information with counterparties.”
Due to the tightening regulations around KYC, AML, and PII exchange, Virtual Asset Service Providers must put more work into satisfying all compliance requirements. The Veriscope Governance Task Force brings some of the most highly respected VASPs in the crypto-economy together to explore compliance solutions and create the first coalition of VASPs for the secure exchange of privacy-sensitive data.