Over the past year, Virtual Asset Service Providers (VASPs) have been scrambling to prepare for compliance with significant regulatory changes called for by the international financial crimes watchdog, the Financial Action Task Force (FATF).
In June of 2019, the FATF updated their Recommendations that require VASPs to share specific sender and receiver information for A cryptocurrency (or crypto currency) is a digital asset des... More transactions over a specific threshold. Quickly becoming known as the “Travel Rule,” the new requirements will force VASPs to address new technological and governance challenges: how to comply with regulators, while simultaneously preserving the cornerstone values of crypto—privacy and security.
In response to the new regulatory hurdle, CipherTrace designed and donated the Travel Rule Information Sharing Architecture (TRISA)—an open-source, decentralized solution to information sharing between VASPs. However, for any solution to work globally, it must include cross-platform user interoperability. This is why TRISA is excited to add PayID to its list of supported platforms, further enabling the interoperability needed for universal Travel Rule compliance for the entire PayID community.
The TRISA Solution
TRISA uses a trusted Certified Authority (CA) model to actively verify the identity of VASPs, adopted from the International Organization for Standardization (ISO), and used to secure most e-commerce and governmental communications. Certificate authorities offer a root of trust to anchor identities to a chain of trusted entities. The architecture catalogs verified VASPs’ public key addresses, which can be used to open a secure line of communication between VASPs to transmit user PII. The CA model safeguards against a single point of failure, provides protection from attacks, and is scalable to accommodate the growing crypto landscape.
The design of TRISA augments blockchains rather than modifying existing protocols, which allows for interoperability between VASPs without overhauling each blockchain’s core functions. To comply with the Travel Rule, the ability to bridge the gap between independent identifiers both of VASPs and users is essential.
Interoperability with PayID
Forty industry leaders across tech and finance collaborated on the development of PayID through the Open Payments Coalition. PayID highlights the importance of clear communication between cryptocurrency users and VASPs, aiming to establish a universal ID system for all payments worldwide. The technology is expected to be compatible across crypto and fiat currencies and with TRISA integration, Travel Rule compliance mechanisms are inherently baked-in.
PayID simplifies and demystifies payments by assigning individuals a human-readable payment ID—like an email address—rather than a string of unrecognizable numbers. As with TRISA, PayID emphasizes interoperability by adding a translation-layer for PayID’s simplified addresses, supporting integration across disparate platforms. The ability to easily adopt and use technology solutions are key factors to success as VASPs push forward under the Travel Rule, seeing technologies that recognize compatibility across digital payments, such as TRISA and PayID, as frontrunners for global adoption.
Initially, PayID’s operability will support the entities participating in the Open Payments Coalition, an industry association with groups from across the tech, finance, and nonprofit sectors. This gives PayID enabled VASPs a way to comply with the Travel Rule whether they’re transacting with other coalition members or with VASPs that use public keys and account numbers as identifiers. His insight into the partnership, Dave Jevans, CEO of CipherTrace and f TRISA Board Member said, “Compliance solutions provide a critical component of mitigating compliance risk, and we look forward to working with PayID to identify and reduce exposure to illicit finance. Our aim has always been to make the digital payments space safe for everyone, and we are excited to lend our expertise and tools towards helping PayID bring the dream of a trusted, open payments network to life.”
Why This Matters
TRISA has built a solution to serve the needs of the many networks, exchanges, and users in the digital asset ecosystem. We are committed to developing the interoperability needed for universal Travel Rule compliance. Unlike other solutions that address local issues, TRISA breaks geographic constraints and enables the What is a Virtual Asset Service Provider (VASP)? A Virtual A... More community to bootstrap a global solution despite discrepancies in technical deployments and regulation timelines. VASPs and financial institutions can immediately begin using TRISA—whose testnet has been live since January 2020—to comply with Bank Secrecy Act (BSA) requirements as well as FATF Travel Rule Recommendations.
To join the Travel Rule Information Sharing Alliance, visit TRISA.io