There has been a push for further regulations on crypto trading since 2019 and the United Nations is at the forefront of this effort. In the spirit of this, the United Nations body calls on all members to implement the Travel Rule in their respective states. Unfortunately, many members failed to follow suit as of June 2023, making the current status of regulations difficult.
The Finance Action Task Force (FATF) reported that more than half of the members have not taken any actions in implementing the Travel Rule. Another report was published on 27th June to call on them again.
What is the Travel Rule?
The Travel Rule is also known as the FATF Recommendation #16. It states that all crypto companies must screen, record, and communicate the information of all users of their platform. That means eliminating anonymity from among the appeals of a decentralised network. This will include ecommerce, exchanges, and websites for crypto casino games alike.
The travel rule has its limitations, though. Users can remain anonymous for as long as their crypto transactions are under $1000 as suggested by FATF. Every member state can also change this threshold to lower or higher as long as the United Nations body will allow it.
Why is the Travel Rule important?
The United Nations body deems the Travel rule as important in covering loopholes in the crypto system. Right now, the FATF speculates that such openings can be exploited for money laundering or funding of terrorists. Thus, crypto can pose a threat on the users and the government unless it's given strict regulation.
Who is enforcing the Travel Rule?
The Finance Action Task Force is the international policy-making body dedicated to fighting against money laundering and terrorist financing. This gives them full authority in investigating how money is handled everywhere in the world. Right now, the Travel Rule is focused on nations with rapid adoption for cryptocurrencies.
Recommendations given by the FATF carries weight in the decision making of the country. However, they are not absolute authority. The local government and its finance department still has the final say on if, when, and how any of FATF's recommendations are implemented. That is also true for the Travel Rule which contains changes many crypto users don't want.
Will the Travel Rule help crypto as an industry?
The Travel Rule was meant to minimise if not close loopholes in crypto finance that can be exploited for criminal activities. Its goal is for the betterment of national security and not entirely for improving investments. However, it is a step in the right direction in making blockchain more popular among users.
Traders and investors can grow if the Travel Rule is implemented. This is possible because many who are interested in the technology abstain from joining because of the lack of regulations. Implementing a strong regulation system for crypto will be beneficial for many businesses, ecommerce and the crypto casino games industry as well.
