Cryptocurrency has always had a shady reputation when it comes to keeping a record of transactions, it all started when it became known that criminals and hitmen were being paid in bitcoin in the early stages of its history.
Also, there its no proof that this had stopped. But since those times, the public is more or less aware of the money laundering that is happening behind the curtain using blockchain. For that reason, Financial Action Task Force’s “Travel Rule” was created.
How it works?
This rule is still in development but its main goal its that the exchanges that meet a certain quantity have to carry the information of the sender and the receiver of crypto assets.
Competing visions emerged for the implementation of this solution as well as criticism for not respecting the privacy of the users.
However, the FATF and US. Government is set to implement this most compelling solution within the next months and have repeatedly called out the rest of the world’s countries for not making advancements in legislations for this situation.
The Most Compelling Answer to The Problem To Date
The VASP competitors BitGO, Coinbase, Gemini, Kraken and Fidelity became members of the U.S Travel Rule Working Group or USTRWG. This group presented a demonstration of the version 1.0 of the travel rule.
The first stage went forward using dummy personal information that will “travel” with the Crypto Transaction between the VASP. This was made possible by using an Inter-VASP Messaging Standard.
The U.S. Travel Rule Group is trying to further develop this system so it would be implemented using real user information by the end of the fourth quarter.
This one- year milestone seems very optimistic as this implementation needs to be implemented and proof its reliability in every exchange platform. However, things are looking promising and this security issue will be gone soon.
The Other Alternative
Other country that is on the head of this FATF travel rule is Switzerland with its OpenVASP Project that has turned to Ethereum intelligent messaging Technologies. The point of the Swiss System is that this key personal information its customers as decentralized as cryptocurrency is.
To be clear this system does not use Ethereum cryptocurrency ether to work but instead just uses its off-chain peer-to-peer messaging system “Whisper”.
Whisper uses dark routing to obscure this message that will only show when authorized law investigators need to do so.
Who Will Control All This Information?
However, this and any implementation of the travel rule will be received with the questions who will be in charge? Although this system its not centralized putting everything on the blockchain have its risks.
But the alternative is lending all this information to central banks or private institutions, and those are things that the general public would not agree as easily. And since it would be considered big data, some court case like Facebook’s could arise in the future.