A company that focuses on digital identity services is evolving to provide more support for cryptocurrency firms. Netki has upgraded its TransactID tool in order to allow crypto companies to conform more appropriately to regulations established by the Financial Action Task Force (FATF), which has begun to more closely scrutinize operators in the crypto space. TransactID now includes two new features specifically for crypto firms as they seek to comply with the FATF’s “Travel Rule.”
The first feature allows an entity to break down a user’s identity certificates into smaller chunks of “personally identifiable information” (PII) and the second includes the ability for both senders and receivers of transactions to request the PII from one another. The company’s co-founder and CEO, Justin Newton, explains in a Medium post, “With the increasing regulatory pressure being placed on cryptocurrency services, we’ve developed a way to maintain compliance without disrupting the business. It’s a comprehensive solution that doesn’t require a huge investment, and adds zero transaction costs.”
Netki introduced its TransactID solution in 2016. It incorporates open-source standards to produce a secure and encrypted peer-to-peer information exchange related to identities before transactions are conducted.
The Travel Rule is designed to help combat money laundering and terrorism. It requires exchanges to collect and transfer identification information of users when they conduct transactions and, although not necessarily binding law, many G20 countries have already asserted that they would follow FATF recommendations as they pertain to crypto regulations.
Newton adds, “We wanted to establish a set of standards for exchanging ID information that could be used by any organization or software developer so that we could avoid creating closed-loop systems in the future. We don’t want a situation where one central resource controls access to technology, as is the case with many technologies like SWIFT and ACH in the global banking system. It’s a standard that VASPs [virtual asset provider] can coalesce around that also works for banks, fintech, and non-custodial wallets, which is particularly important given FINMA’s new guidance. Any solution that doesn’t work for all of them is a non-starter.”
TransactID has already found support in the financial industry. It has reportedly been selected by the financial regulatory body of Singapore, MAS, as well as undergone testing by both commercial and central banks. Netki asserts that it is the “only peer-to-peer compliance solution for VASPs that’s been in production since 2016.”
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