The US Travel Rule WG (USTRWG) is a regional travel Rule solution designed to allow US-based MSB’s licensed by FinCEN to implement and comply with the US Travel Rule rapidly.
Unlike many industry initiatives, USTRWG members believe that the Travel Rule must first be solved locally. Since the US has the oldest Travel Rule regulation through the Bank Secrecy act, the USTRWG designed their protocol explicitly to comply with the FinCEN rules first and not necessarily the FATF guidelines.
This article covers factors to consider when choosing USTRWG as a Travel Rule messaging protocol.
The USTRWG solution incorporates two separate components to address the Travel Rule: (1) a centralized bulletin board used to identify the correct counterparty, allowing Sending and Receiving VASPs to connect with one another, and (2) an encrypted P2P channel to securely transfer the requisite PII.
Similar to TRP, each VASP using USTRWG provides an API endpoint, yet USTRWG adds a centralized bulletin board to solve the ‘discovery’ problem, the identifying of which VASP is behind an address. The bulletin board shows a wallet address and which VASP owns it. The Beneficiary VASP then replies privately to claim the transaction.
The USTRWG is a closed network that comprises a group of large VASPs, including Bitgo, Coinbase, Gemini, etc. To join USTRWG, VAPSs must have an active MSB License from FinCEN. Page nine of USTRWG’s whitepaper says, “The beta solution will initially serve U.S. VASPs to comply with FinCEN requirements and will evolve over time to support additional jurisdictions in future phases.”
USTRWG is a protocol. VASPs will still need to partner with a fully integrated Travel Rule solution provider or build additional components to integrate USTRWG.
The integration effort of USTRWG is currently unknown.
Although USTRWG’s Travel Rule data payload will adhere to the InterVASP Messaging Standards, IVMS101 (page 31, USTRWG whitepaper), the USTRWG was explicitly designed only for communication with US-based group members.
USTRWG is run by its participants.
USTRWG does not support communication with non-custodial wallets. However, the solution requires custodial services to prove that they own an address in a Travel Rule transaction.
The USTRWG is not live yet. However, there has been mention of a testnet in Q4 2021.
USTRWG is supported by a group of the large US-based exchanges: Coinbase, Fidelity, Gemini, Kraken, Bitgo, Bitstamp, Paxful, Trade Station, Anchorage, Paxos, etc.
There is a nominal membership fee to join USTRWG, ~15,000 USD.
Notabene will add support for USTRWG once the protocol is live. However, given this is a membership-only protocol, our customers who want access to it will have to apply independently to become members.
A VASP that uses USTRWG could send transactions to the large US-based VASPs.
This solution cements a walled garden that limits transactions to only those within the network through a centralized messaging system. Only exchanges that pass the strict membership criteria will be able to transact with each other, thus directly halting the global aspect of cryptocurrency flow.
The WG specifically designed this solution not to be able to handle international transfers. Only US-based licensed MSBs are allowed to use this with each other.
The working group has not yet opened up the protocol to allow service providers to join.
There has been mention of a USTRWG testnet in Q4 2021.
The steps to implementing USTRWG are currently unclear.
USTRWG via Wayback Machine | USTRWG Travel Rule Solution