Travel rule on-chain

What is the Travel Rule?

The United States Treasury Department’s Financial Crimes Enforcement Network (FinCEN) mandates that funds transfers of $3,000 or more (or equivalent in cryptocurrency) require the originating institution to transmit KYC information about the originator of a transaction to the beneficiary institution. This regulation is intended to help safeguard against money laundering and other financial crimes by preserving an information trail regarding senders and receivers of funds.

 

Why does this apply to me?

Circle belongs to the Travel Rule Universal Solution Technology (TRUST) working group, which is composed of U.S. Virtual Asset Service Providers (VASPs) that are collaborating to develop and maintain an industry-led solution to comply with the Travel Rule mandate. While cryptocurrency represents a new paradigm for transferring value seamlessly and securely, Circle and other financial institutions must comply with existing regulations designed for a world before crypto.

 

The Travel Rule mandate applies to you and your end-users for ERC-20 transfers on Ethereum (which includes USDC transfers on Ethereum) equivalent to $3,000 or more.

 

What action do I need to take?

In response to these requirements, we’ve made changes to our APIs that will require you to update your existing integration with Circle. All Circle customers with an active Payouts or Accounts subscription will be impacted:

  • We’ve updated our developer guide so you can begin scoping adjustments to your integration today.
  • We intend to launch sandbox functionality on May 24th, 2022.
  • To maintain API functionality, you must comply with sending KYC information about the originator for ERC-20 transfers on Ethereum by June 30th, 2022.

When do I need to provide KYC information about the originator?

When using the POST /v1/transfers endpoint, you need to provide KYC information about the originator (i.e. either your company or your end-user, depending on if you are sending funds on behalf of your end-user) within the API request.

 

When using the POST /v1/businessAccount/transfers endpoint, no specific action is required, as Circle will consider the originator of the transfer to be your company.

 

Do I need to provide KYC information for an ERC-20 transfer on Ethereum that is less than $3,000?

No, not at this time. We will reach out to you in advance if this enforcement threshold changes in the future.

 

I currently transfer USDC on many blockchains. Do I need to provide KYC information for a USDC transfer sent on a blockchain other than Ethereum?

No, not at this time. We will reach out to you in advance if this enforcement criteria changes in the future.

 

What method is Circle using to maintain the security and privacy of my end-users KYC information?

At Circle, we take security and user data privacy very seriously. Our API uses an end-to-end encrypted channel to securely transmit KYC information about the originator to the validated beneficiary institution.

 

How does this apply to external wallets not hosted by Circle?

Based on our implementation for Travel Rule compliance for Circle-hosted wallets, we can provide guidance on how to remain compliant for external wallets not hosted by Circle (i.e. collecting and sending originator KYC information for ERC-20 transfers on Ethereum). However, we cannot control nor enforce the compliance of external wallets not hosted by Circle.

 

TRUST launched in January. Why am I only getting this notice now?

TRUST launched in January for BTC and ETH only. The TRUST network continues to expand and is currently implementing support for all ERC-20 transfers on Ethereum.

 

Do the Travel Rule requirements conflict with other regulations, such as GDPR?

The Travel Rule meets the legitimate interest basis because it is a requirement for us to provide the services under the contract with you. Otherwise, the failure to ensure your compliance with the Travel Rule would prevent us from being in compliance with U.S. law, and as such, we would not be meeting our contractual obligations. The data provided under the Travel Rule requirements would only be used for this purpose.

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