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The State of Crypto Travel Rule Compliance Report 2022

A comprehensive examination of the industry's readiness to comply with FATF's crypto Travel Rule.
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2021 was the year crypto transactions had mainstream adoption–2022 is the year of crypto regulations being enforced to keep transactions safe. New regulatory requirements have become the latest disruptive force that senior-level executives need to consider when making important decisions regarding business growth. 

In Nov 2021, crypto’s total market cap surpassed $3T for the first time, having grown 5-fold over one year. With the influx of institutional players and broad adoption of new technologies in DeFi and NFTs, we expect that market to continue growing fast in coming years.

As crypto transactions move beyond speculative traders and technology enthusiasts into cross-border payments and capital market structures, the Financial Action Task Force (FATF) relegated regulations like the Crypto Travel Rule to mitigate money laundering and terrorist financing. FATF’s Travel Rule requires any participating financial institutions in a transaction to exchange relevant beneficiary and originator KYC information.

To explore how the Travel Rule is presently being rolled out in the crypto and financial services industries, Notabene ran a survey to gauge global compliance readiness and gain a better understanding of the primary pitfalls to compliance.

The survey was conducted in October 2021, with 56 crypto businesses and financial institutions participating. The below report includes the survey results, as well as covers the latest state of enforcement by jurisdictions. 

The results show that financial institutions and cryptocurrency companies are taking Travel Rule compliance seriously but are at varying states of readiness–largely dependent upon their primary operating jurisdiction. 


Report highlights

  • The majority of respondents (67%) plan to become fully compliant by the end of Q2 2022. Yet more than 60% have not started implementation yet and remain in the research phase.
  • 52% of respondents cite legal uncertainty and the sunrise period as their biggest hindrances to Travel Rule adoption (breakdown respectively of: 27%, 25%). 
  • The second largest factor contributing to non-compliance being a lack of resources, with 23% citing a lack of technical resources, and 9% citing a lack of compliance/legal resources.
  • Close to one-third of companies (31%) fully or partially comply with the Travel Rule.*
    *We define fully complying as sending and responding to Travel Rule data transfers. Partially complying means a company is sending or responding to Travel Rule data transfers.

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The State of Crypto Travel Rule Compliance Report

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FAQ

The State of Crypto Travel Rule Compliance Report 2022

What is the The State of Crypto Travel Rule Compliance Report?

To explore how the Travel Rule is presently being rolled out in the crypto and financial services industries, Notabene ran a survey to gauge global compliance readiness and gain a better understanding of the primary pitfalls to compliance. The survey was conducted in October 2021, with 56 crypto businesses and financial institutions participating. The results show that financial institutions and cryptocurrency companies are taking Travel Rule compliance seriously but are at varying states of readiness–largely dependent upon their primary operating jurisdiction. Additionally, it highlights the differences in Travel Rule adoption across jurisdictions, approaches to Travel Rule implementation, and summarizes adoption pitfalls.

Why is it important?

The State of Crypto Travel Rule Compliance Report is the first-ever comprehensive global Crypto Travel Rule compliance survey. This report demonstrates a transparent understanding of compliance readiness levels and pain points across multiple VASPs in different jurisdictions. Additionally, the results show that the industry would benefit from closer collaboration with regulators when rolling out Travel Rule. As such, Notabene will kick off several initiatives: including monthly testnets and a webinar series to foster a dialogue between regulators and the industry on some of the key issues identified.

Why choose Notabene as a Travel Rule compliance solution?

We help financial institutions and virtual asset service providers (VASPs) comply with the FATF’s Recommendation 16 “Crypto Travel Rule” as required by domestic regulators in a growing number of jurisdictions.Notabene is the only end-to-end Travel Rule compliance solution that offers a protocol-agnostic approach to Travel Rule complianceEasy to use dashboard & ability to set risk management rulesOur in-house solution, TRNow, allows counterparty VASPs to share, send, receive, and store required PII data privately and securely