Japan-based cryptocurrency exchange bitFlyer has recently adopted stringent anti-money laundering (AML) measures to comply with the global financial crime watchdog FATF’s “Travel Rule” for sharing information on transfers. The implementation of these measures seeks to promote transparency and reduce illicit activities in the cryptocurrency market.
Starting Tuesday afternoon Japan local time, bitFlyer has enforced restrictions on transfers from its platform to other platforms that do not comply with the Travel Rule Universal Solution Technology (TRUST). TRUST is a system initiated by U.S.-based crypto exchange Coinbase to help firms adhere to FATF’s requirements.
BitFlyer has established notification requirements for sending and receiving cryptocurrency to TRUST-compliant platforms in a list of 21 countries, spanning Japan, Israel, Gibraltar, Hong Kong, the Bahamas, and Switzerland, among others. Furthermore, bitFlyer limits transfers to these compliant platforms to only TRUST-compatible crypto assets, such as bitcoin (BTC), ether (ETH), and select ERC-20 tokens, thereby narrowing the scope of cryptocurrencies that can be transferred.
For countries not included in this list, as well as for private wallet transfers, bitFlyer allows transactions in any cryptocurrency asset available on its platform. With these new measures in place, domestic crypto transfers to and from bitFlyer are now only possible with Coincheck, the other TRUST-compatible platform in Japan – and exclusively via bitcoin.
This move comes as Japan pledges to enforce FATF’s travel rule, which calls for sharing crypto transaction information between platforms. The watchdog has been urging advanced economies within the G-7 to spearhead the fight against money laundering through digital assets. On the other hand, it could stifle innovation and the free flow of capital in the crypto market.
However, it is important to note that bitFlyer’s U.S. unit has recently been fined by a New York financial regulator for failing to meet cybersecurity requirements. By taking steps to implement FATF’s travel rule, bitFlyer could be seen as responding to regulators’ demands, striving to rectify its past shortcomings, and fostering a secure ecosystem for its users.
While the regulations’ primary aim is to curb illegal activities and ensure transparency in the crypto market, detractors argue that this can come at the cost of innovation and limit the potential of cryptocurrency as an open financial tool. As the industry evolves, striking a balance between security, regulatory compliance, and technological advancement remains essential to guarantee the sustainable growth of the cryptocurrency market.
Source: Coindesk
