The cryptocurrency industry has been grappling with issues related to regulatory compliance for a while now. In response to these concerns, Japan-based cryptocurrency exchange bitFlyer has announced new measures aimed at curbing money laundering and terrorist financing. The exchange is implementing new AML measures put in place by the Financial Action Task Force (FATF), known as the “Travel Rule,” which requires crypto exchanges to share information about their customers’ details whenever transactions are initiated to or from their platforms.
To comply with the new requirements, bitFlyer has restricted transactions to TRUST-compliant platforms across 21 countries, including Japan, Canada, South Korea, Singapore, Israel, Hong Kong, Germany, and Switzerland. The Travel Rule Universal Solution Technology (TRUST) is a system that allows crypto platforms to work together in complying with the Travel Rule. It was spearheaded by Coinbase, a leading US-based cryptocurrency exchange.
Additionally, bitFlyer will only support transactions to Coincheck, which is Japan’s other TRUST-compatible exchange. Currently, only Bitcoin is the TRUST-compatible asset accepted until Coincheck completes its system development to support ERC-20 tokens. The exchange also revealed that crypto transfers are now restricted to TRUST-compatible cryptocurrencies, which include Bitcoin, Ethereum, and multiple ERC-20 tokens like Polygon, Chainlink, Shiba Inu, and Maker.
bitFlyer’s decision comes in response to Japan’s recent move to implement FATF’s tough anti-money laundering checks as defined in the travel rule. It also comes a few days after FATF urged G7 nations to work together in the battle against money laundering in the digital assets space.
It is worth noting that the travel rule is not a new regulation. Rather, it has been a long-standing rule in the financial industry, requiring financial institutions to maintain specific records about their customers and to share these records with counterparties in certain situations. The rule is meant to prevent money laundering, tax evasion, and other illicit activities, and is widely seen as an important tool for combating financial crimes.
bitFlyer’s decision to implement the travel rule is a welcome development, as it underscores the importance of regulatory compliance in the cryptocurrency industry. By restricting transactions to TRUST-compliant platforms and supporting TRUST-compatible cryptocurrencies, the exchange is demonstrating its commitment to ensuring that its platform is not used for illicit purposes. This move should serve as an inspiration for other exchanges to follow suit and implement measures to enhance regulatory compliance in the industry.