Since day one, crypto and blockchain technology have been about enabling permissionless transactions between people and businesses. Many of us in the industry have built incredible products to make crypto accessible to the wider audience. However, the primary stumbling block for wider adoption always pointed back poor ties to the traditional financial industry, primarily due to the lack of a regulatory framework.

The industry is now at a turning point. FATF's new global framework and, in particular, the Travel Rule itself, is the biggest opportunity crypto has had for crossing the chasm into mass adoption.

Once your company implements the Travel Rule, it will make it much easier for you, as a virtual asset service provider (VASP), to do business with traditional financial institutions and by extension commerce with non-crypto businesses.

1. Regulatory clarity

Outside of a few major jurisdictions such as the US, Switzerland, and Singapore, most countries have not prioritized regulating or understanding the technology and its benefits.

This has been particularly problematic for exchanges outside of the main global financial centers, who have had problems both directly with regulators and indirectly through the loss of financial partners.

‍Notabene co-founders, Pelle and Andres, have both had to shut their early Bitcoin businesses down because of this exact problem in Kenya and Chile.

This also affects countries with strong regulation, where interacting with unregulated institutions has always been a risky grey area.

The new 2019 FATF guidelines for Virtual Assets forces local regulators to take a stance. They are required to either create a roadmap for a regulatory framework for VASPs or, unfortunately, outright ban them. Of course, the second option is problematic, but there are already well-thought-out legal frameworks from countries like the US, Switzerland, South Africa, South Korea, and Singapore. They will hopefully provide a good example to more risk-averse regulators.

2. Easier access to banking services

For several years, we have heard from traditional banks that the primary reason they would not open bank accounts for crypto businesses was the inability to prove a reliable source of client funds. It was simply too risky for them to engage with customers holding crypto.

The new Travel Rule specifically solves this problem. It enables crypto businesses to fully participate in the global financial system by bringing them to the same level of accountability that the traditional financial institutions already adhere to. This finally allows crypto businesses to be treated seriously by the financial industry as a whole.

The most successful crypto businesses have invested a lot of time and money in convincing their banking connections that they have very strict KYC and AML policies in places.

Solving the Travel Rule by performing strong due diligence on partner VASPs will help crypto businesses reduce this risk and become trusted partners for traditional financial companies. This is also a great opportunity to start implementing the Travel Rule before your jurisdiction requires you to do so.

3. Improved fiat on/off ramps globally

With better access to banking comes much better access to local payment systems around the world. This alone could really improve the adoption of cryptocurrencies as well as bring whole new classes of untapped users around the world to the innovations in the DeFi space.

4. Crypto and DeFi could become the rails for future FinTechs

Most FinTechs today differentiate themselves by improving UX and on-boarding and finding new use-cases for what is, in essence, the same products the traditional financial industry has offered for years.

As crypto products become regulated, with Travel Rule adoption and more thorough blockchain specific KYC/AML, fintech will look to adopt many of the new products coming out of the DeFi space. This will help them add new revenue opportunities and find better ways to differentiate themselves from incumbent financial services.

5. Lower regulatory risk means easier access for institutional investors

Institutional investors from around the world are actively looking at adding crypto as a new asset class. Lack of regulatory certainty has been one of the largest issues holding them back from wider investment in the space.

Blockchain analytics tools have already helped lower the risk of dealing with crypto assets, but through our conversations with institutional investors, we have learned that new regulations like the Travel Rule will really help open up the asset class to them.

We believe this will help increase the demand for cryptocurrencies. It will also improve liquidity and demand in the DeFi space.

6. Learn more

It is paramount for both new and existing businesses in the crypto space to understand more about how the Travel Rule affects your business.

This month, The Better Money Company paid a Notabene invoice in RLUSD. We received USDC. Nobody on either side arranged a trade to make that happen.

The gap between what a payer holds and what a recipient wants is one of the quieter obstacles to B2B stablecoin payments. Someone has to do the swap, and sometimes bridge across chains, before or after the payment. Our partnership with The Better Money Company moves that conversion into the payment itself.

How stablecoin conversion works inside a Notabene Flow payment

Notabene Flow orchestrates the payment. It verifies who is paying whom and carries the invoice reference and Travel Rule data with the transfer, so each side knows what the payment is for before it arrives. The Better Money Company handles conversion. When the payer and the recipient hold different stablecoins, its clearinghouse converts between them as the payment executes.

Notabene never holds or moves the funds. The payer sends from its own wallet, and The Better Money Company delivers the converted asset to the recipient. Banks and card networks already divide the work this way, with one party carrying the message and the trust and another handling the money.

Stablecoin invoice payments for Notabene Flow customers

Notabene Flow customers already send and receive invoice payments in stablecoins. Conversion is a layer on top of those same payments. The payer pays in whichever supported stablecoin it holds, and the recipient receives the one it prefers.

The receiving side gains the most. A business that wants to accept stablecoin payments but hold only one stablecoin no longer has to ask each customer to convert first, or take whatever arrives and convert it afterward. The invoice says what it wants, and that is what lands.

Paying a real invoice in RLUSD and receiving USDC

The first real test of this was a payment between the two partners. Notabene issued an invoice as a Notabene Flow payment link. The Better Money Company paid it in RLUSD from its Utila wallet, connected through WalletConnect, and its Auto Routes feature cleared the RLUSD into USDC. We received USDC, the stablecoin our finance team holds. Both legs ran on Ethereum.

On our side, it ran like any other Flow payment. Flow verified The Better Money Company as the counterparty and exchanged Travel Rule data before any funds moved, and the invoice reference traveled with the payment. Alice Nawfal, our President and Co-founder, and Sam Broner from The Better Money Company walk through it in the video below.

Which stablecoin is best for B2B payments?

The one each side already wants to hold. That answer gets harder to deliver as dollar stablecoins multiply across chains, because every new asset makes it more likely that payer and payee won't match. RLUSD to USDC on a single chain is the easy version of the mismatch. The harder versions cross chains.

The fix belongs in stablecoin payment infrastructure, so a finance team picks its asset once and stops tracking what its counterparties hold. Notabene Flow orchestrates the payment and provides the compliance tooling around it, while partners like The Better Money Company handle conversion and liquidity. Our next step is turning a payment we arranged for ourselves into something any Flow customer can switch on.

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Want this capability on your stablecoin payment flows? Book time with our team and we'll be glad to get you set up.