CoolBitX founder Michael Ou believes that Asian regulators are the first to comply with the Financial Action Task Force (FATF) Travel Rule, which takes effect in June this year.
The startup has developed a solution to the Travel Rule, called the Sygna Bridge, which allows exchanges to communicate with the senders and recipients of each transaction.
On May 7, it announced that it had conducted a series of tests of cross-border transfers that demonstrated the effectiveness of the Sygna Bridge in meeting FATF guidelines, checking that transactions do not bear the names of known terrorists and drug traffickers.
The security company CoolBitX raised USD 16.75 million in a series B round
Singapore and South Korea
Ou told Cointelegraph that, in his opinion, Singapore and South Korea have the best security measures, prior to the launch of the travel rule in a few weeks.
„Asia is on track to change the crypto industry and could provide a blueprint for the rest of the world,“ he said, pointing to Singapore’s Payment Services Act and South Korea’s
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legislation amending the Financial Transaction Specific Reporting and Use of Information Act as examples of regulations that were prepared for the Travel Rule.
As the world’s third largest economy, Japan has seen major financial institutions such as Nomura, SBI Holdings and Rakuten make significant investments in the Japanese crypto market, Ou said Japan must also play a major role in regulating Virtual Asset Service Providers (VASPs):
„It is expected that the forthcoming mutual evaluation report in Japan will also focus on the compliance of VASPs with the FATF recommendations. It would be useful for other countries if regulators in Japan, which many consider to be a leader in the adoption of digital assets, could demonstrate the measures employed to ensure that VASPs comply with the FATF recommendations“.
South Korea passes law to introduce a permit system for cryptoexchanges
Meanwhile, InterVASP published a new messaging standard to facilitate data exchange between VASPs. If effective, it would also help the company comply with the FATF Anti-Money Laundering (AML) regulations.
History of the Travel Rule
In 2019, the FATF asked the world’s regulators to adopt its AML guidelines for cryptosystems. This was called the Travel Rule and provided for a series of AML and ATF measures for exchanges to prevent crypto-currency from being used illegally.
The FATF said it would „monitor the implementation of these new rules in each country and financial service provider and conduct a study for 12 months starting in June 2020“, which would give the crypto community a year to catch up.