// GLOSSARY -- SECURITY & COMPLIANCE

What is Travel Rule?

1 min read Updated

The Travel Rule is a regulatory requirement that financial institutions share sender and recipient information for transactions above certain thresholds — extended to cryptocurrency transfers to combat money laundering.

WHY IT MATTERS

Originally from traditional banking (FATF Recommendation 16), the Travel Rule now applies to crypto: when a Virtual Asset Service Provider (VASP) sends a transfer above a threshold (often $1000), they must share originator and beneficiary information with the receiving VASP.

Implementation challenges: blockchain transfers don't natively carry identity information. Compliance requires separate messaging layers (TRISA, TRP, OpenVASP) that transmit identity data alongside on-chain transfers.

The Travel Rule affects exchanges, custodians, and any regulated crypto service. Pure DeFi (wallet-to-wallet, no intermediary) is generally outside scope, though this interpretation varies.

FREQUENTLY ASKED QUESTIONS

Does the Travel Rule apply to DeFi?
Generally no — the Travel Rule applies to VASPs (intermediaries), not peer-to-peer transfers. However, regulatory interpretation is evolving, and some jurisdictions may extend requirements.
What information is shared?
Originator name, account number, and address/date of birth. Beneficiary name and account number. This data travels separately from the blockchain transaction via compliance messaging protocols.
How do exchanges comply?
Through Travel Rule compliance solutions (Notabene, Sygna) that handle secure information exchange between VASPs. Some exchanges restrict transfers to non-compliant VASPs.

FURTHER READING

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