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UK digital currency businesses to implement Travel Rule from September 2023

In July 2022, the U.K. government passed legislation to begin enforcing the Travel Rule in the digital currency industry. The rules will officially kick in from September 2023.

Under the rule, U.K. digital asset businesses will be required to share customer information when making transfers to help identify suspicious activity. This will apply when transfers happen within the U.K., as well as between the U.K. and any jurisdictions that have implemented the Travel Rule.

When transfers occur between the U.K. and jurisdictions that have not implemented the rule, the U.K. Virtual Asset Service Providers (VASPs) must take steps to see if the recipient is capable of receiving the information and can collect and store it.

The Travel Rule is a collection of Anti-Money Laundering and Counter-Terrorist Financing (AML-CTF) rules created by the Financial Action Task Force in 2012. The FATF extended the Travel Rule to Virtual Asset Service Providers in 2019.

Regulations are ramping up in the digital currency sector

All across the world, governments are passing new laws and updating old ones to deal with digital currencies and tokens of all kinds. This is, in part, an attempt to deal with the rampant crime in the industry, including money laundering, sanctions violations, and industrial-scale fraud.

In recent times, the U.S. Securities and Exchange Commission (SEC) has been on an enforcement spree against illegal token issuers and exchanges like Coinbase (NASDAQ: COIN) and Binance. China cracked down on the laissez-faire digital currency industry years ago. The European Union has made it clear that anonymous transactions won’t fly within its territory. The U.K. enforcing the Travel Rule is just the latest example of governments bringing the industry into line, and this trend will continue for years to come.

Of course, this is no surprise to anyone who has been listening to Bitcoin’s inventor Dr. Craig Wright. He has warned for years that existing financial rules apply to the digital currency sector, and as such, the BSV Technical Standards Committee laid out a Travel rule specification in 2020.

As crypto-anarchists continue to double down, insisting that the law will not be able to touch ‘anonymous’ blockchain technology and tokens like BTC, reality continues to prove them wrong. The law does, will, and always has applied to blockchain technology and digital currencies, and no amount of wishful thinking can change that.

With a major financial hub like the U.K. implementing the Travel Rule, expect many others to follow. After all, the most financially powerful countries are in a position to set the rules if others wish to do business with them, and right now, they’re all on the same page; the lawlessness in the digital currency space must end, and a legally compliant industry that provides real value and utility must emerge.

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