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2024's Travel Rule Widespread Implementation: What Businesses Need to Know

The Notabene Team
The Notabene Team
March 11, 2024
A member of the Notabene team crafted this post.

In the past year, the crypto compliance landscape has seen remarkable developments, leading to the widespread adoption of Travel Rule compliance. By the end of 2024, the Travel Rule is expected to see mass adoption, but not without bringing its operational complexities. This article explores critical trends and introduces Notabene's solutions to these evolving regulations.

Global Adoption: Setting the Stage for Universal Compliance

The past year has marked a significant shift towards regulatory alignment on a global scale. The United Kingdom, with the third highest transaction volume worldwide, adopted the Travel Rule, meaning that the regulation will cover a substantial volume of global transactions.

The European Union, through the Transfer of Funds Regulation, has set a new precedent, standardizing crypto Travel Rule requirements across its 27 member states. In the Asia-Pacific region, countries like Hong Kong and the United Aarab Emirates (UAE) have integrated Travel Rule compliance into their crypto business licensing frameworks. Eighty VASPs are currently looking to establish their presence in Hong Kong, and 1000 firms have applied to register under Dubai’s Virtual Asset Regulatory Authority. Given their substantial crypto asset transactions, India and Japan's adoption of the Travel Rule underscores the global momentum towards standardized regulatory practices. Their compliance is particularly noteworthy given the combined $300 billion in crypto assets received. [1]

The momentum extends with the Transfer of Funds Regulation coming into effect on December 30, 2024. We expect the Travel Rule to broaden its reach to regions like Latin America, South Africa, Taiwan, Australia, and Qatar. Additionally, Notabene’s “State of Crypto Travel Rule Compliance Report 2024" revealed a strong industry drive towards compliance, with 96% of virtual asset service providers (VASPs) aiming to meet the requirements by year-end, highlighting the critical nature of compliance for business continuity and the potential risks for non-compliant VASPs.

Notabene's State of Crypto Travel Rule Compliance Report, page 45

The Multi-Jurisdictional Compliance Challenge

Operating across various regulatory jurisdictions presents unique challenges. Global VASPs must take a nuanced approach to maintain operational fluidity while adhering to diverse regional regulatory implementations. Our yearly report reveals that nearly half of the businesses surveyed navigate Travel Rule obligations in multiple jurisdictions, significantly increasing the complexity of compliance efforts. 

Notabene's State of Crypto Travel Rule Compliance Report 2024, page 50

Further, 65% of respondents highlighted a "multi-jurisdictional roll-out" as a critical success factor for their Travel Rule solutions.

Notabene's State of Crypto Travel Rule Compliance Report 2024, page 51

Streamlining Compliance with Notabene's Multi-Jurisdictional Tool

Notabene offers tailored solutions to ease the complexities of multi-jurisdictional compliance. Our Multi-Jurisdictional Compliance Tool simplifies the management of compliance obligations across different countries, enabling businesses to integrate new jurisdictions into their operational frameworks with just one click, gain comprehensive insights, and redirect transactions efficiently.


Tackling Self-Hosted Wallet Compliance

The Financial Action's Task Force (FATF's) updated guidance now extend the Travel Rule to include self-hosted wallets, requiring businesses to identify and, in some cases, verify the owners. The EU's upcoming Markets in Crypto-Assets Regulation (MiCA) will further enforce this, mandating self-hosted wallet verification for transactions over 1,000 EUR.

Trend Analysis: How VASPs Are Navigating Self-Hosted Wallet Compliance

Our findings indicate a global trend towards mandatory wallet ownership verification, with 66% of companies implementing restrictions on self-hosted wallet transactions. A notable 33% of companies mandate first-party transactions. This means that a third of the businesses surveyed only allow transactions where customers can directly demonstrate control over their wallet addresses.

Notabene's State of Crypto Travel Rule Compliance Report 2024, page 65. Note: Numerical values and percentages have been rounded to the nearest whole number for ease of reading.

Enhanced Self-Hosted Wallet Verification: SafeConnect

In response to evolving compliance needs, Notabene has enhanced its SafeConnect tool for self-hosted wallet verification. The latest update introduces Bitcoin Wallet Ownership Proofs and improved capabilities for Ethereum wallets, streamlining the verification process while maintaining transactional ease.


Looking Ahead: Ensuring Compliance in the Evolving Regulatory Landscape

As the regulatory landscape continues to evolve, it underscores the need for robust and scalable Travel Rule compliance solutions. Notabene's tailored solutions offer businesses the tools they need to navigate these changes with confidence. Take the first step towards securing your business's future in the evolving crypto landscape. 


[1] Chainalysis. 2023. The 2023 Geography of Cryptocurrency Report, pg 50.