What is the Travel Rule?
The Travel Rule is an international regulatory requirement which requires money service businesses to communicate with each other when users send funds from one financial institution to another.
When it comes to the Travel Rule and cryptocurrency, there are businesses called Virtual Asset Service Providers (VASPs), who allow users to send and receive cryptocurrency. Paxful is an example of a VASP.
The Travel Rule requires VASPs to collect specific information about a transaction being sent from one VASP to another and then communicating that information securely back and forth. The goal of the Travel Rule is to help understand where users are sending and receiving cryptocurrency from.
Why is the Travel Rule important?
The Travel Rule helps keep you and your cryptocurrency safe by requiring additional information during a transfer of funds from one wallet to another. With the increased transparency, there’s less risk for sending crypto to an unknown wallet address, and it helps organizations detect money laundering and terrorist financing.
Who is behind the Travel Rule?
The Financial Action Task Force (FATF), FINCEN, and other international regulatory bodies introduced the Travel Rule into the world of finance and cryptocurrency. The FATF is a group that sets the standards to fight money laundering and terrorist financing.
What does this mean for you?
Starting on July 2021, if you’re sending more than $1,000 in crypto from your Paxful Wallet, you’ll need to be ID and address verified, and you’ll need to provide the following information about the recipient of the funds:
- First and last name of the recipient
- Company that hosts the recipient’s wallet
*Note: this is only for external send outs. If you are sending more than $1,000 in crypto to another Paxful user, the Travel Rule doesn’t apply.