Making crypto compliant with existing regulatory frameworks and interoperable with traditional legal and financial systems is “an enormous yet hugely worthwhile task,” according to Binance, which remans the world’s largest crypto exchange in terms of trading volume and overall scope of operations. This, despite having agreed to a massive $4.3 billion+ settlement with US regulators and facing major operational and compliance challenges in nearly every major jurisdiction (recently including Nigeria and the Philippines among other nations).
In a blog post, Binance says that to get there, we must achieve “a certain level of standardization in how our industry goes about compliance.”
Binance has recently made a step in this direction by joining the Global Travel Rule (GTR) Alliance – a global community of virtual-asset service providers “utilizing the same solution for complying with one of the key international anti-money-laundering rules.”
Joining GTR Alliance will aim to “ensure a higher level of both data security and regulatory compliance.”
This strategic move is designed to “keep the in alignment with the Financial Action Task Force’s (FATF) Recommendation 16, a reporting requirement also known as the Travel Rule, which is already being enforced across various countries and is set to become the universal standard within the coming years.”
According to Binance’s blog post, a well-regulated environment plays “a vital role in protecting users, dispelling unwarranted perceptions about crypto and driving the wider adoption of crypto assets.”
Despite this announcement, Binance continues to face significant operational challenges mainly due to its inability to communicate effectively with lawmakers and regulatory authorities through the world.
However, Binance says that it is “a trusted service provider in the digital asset ecosystem.”
They further claim to be “duty-bound to ensure that users’ personal information is secure and private. Our partnership with GTR represents a step forward in this direction.”
GTR aims to create “a more secure and streamlined environment for companies to navigate the FATF Travel Rule requirements” by leveraging the following features:
- Global: The solution allows multi-regional coverage through a single platform.
- Secure: The tool relies on secure encrypted channels to ensure that all personal data is kept safe.
- Seamless: GTR only requires one-time integration to unlock superior interoperability between many digital-asset service providers.
Thanks to its extensive applicability, robust data protection mechanisms, and streamlined integration, GTR provides efficiency and security “suited to global Virtual Asset Service Providers (VASPs) like Binance.”
Industry players utilizing this solution “form the GTR Alliance, thus promoting interoperability and standardized compliance in the digital-asset space.”
GTR’s approach to data security is one of its “strongest suits.”
In one of its solutions, VASPs are provided “with full control over their own decryption keys and safeguards transaction validation by applying Keccak256 encryption to all Personal Identifiable Information (PII).”
It transforms sensitive user data “into irreversible and unique identifiers while making sure plaintext PII storage is eliminated.”
The transmission of such hashed information “is carried out using mutual transport layer security (mTLS) technology, thereby strengthening the security framework with a zero-trust model.”
Steve Christie, Binance’s Deputy Chief Compliance Officer, shared:
“Joining the Global Travel Rule Alliance is an exciting step forward in solidifying our international compliance efforts. We’re particularly enthusiastic about the ability it gives us to consolidate our efforts globally, moving past the challenge of fragmented regional integrations. This move doesn’t just bring us into alignment with FATF’s global standards – it’s about proactively providing our extensive user base with the assurance that their data and transactions are secure. This alliance amplifies the trust, security, and transparency that our users can expect at Binance.”
Joining forces with the GTR also allows them “to work hand-in-hand with other compliance-focused industry leaders, including CODE, Sygna, and Sumsub.”
Together, they aim to “enhance trust within the crypto ecosystem and address collective compliance needs.”
