The FATF Travel Rule requires originator and beneficiary information to travel alongside a transfer between regulated institutions. Extended to virtual asset service providers in 2019, it obliges crypto exchanges and custodians to exchange identifying data about the parties to a transfer — which is, unavoidably, an inter-organisational data exchange problem.
FATF Travel Rule
Statute Global (FATF member jurisdictions)
The Travel Rule is a compliance obligation shaped exactly like an API standard. Two institutions that may never have spoken need to exchange structured, verified data about the parties to a transfer, at the moment of that transfer, across borders and across jurisdictions that implement the rule differently.
- Originator and beneficiary data - Names, account identifiers and, above a threshold, address or identity details, travelling with the transfer.
- Applies between institutions - It governs the message between VASPs rather than anything on-chain, which is why the chain itself does not solve it.
- Sunrise problem - Jurisdictions adopted it at different times, so counterparties are frequently subject to different rules.
- Counterparty due diligence - A sending institution must know something about the receiving one, which requires a directory of some kind.
- Met by private networks - Several proprietary networks exist to carry these messages; an open, published contract does not.
The State of Blockchain & Crypto APIs makes the comparison plainly: this is an inter-organisational data exchange met with a handful of proprietary networks rather than an open specification, and the parallel with EDI in supply chain is close. A compliance obligation, a private network, and an industry entirely capable of writing the open version. It is worth watching whether the market that standardised ERC-20 voluntarily does the same here, or whether the Travel Rule stays a set of walled directories.
Referenced in API Evangelist papers
This regulation shows up in my published research. These reports read the machine-readable evidence provider by provider — and put this regulation in the context of a real sector.
The State of Blockchain & Crypto APIs
An inter-institution data exchange — the exact shape of an API standard — met with private networks rather than an open contract, the same pattern as EDI in supply chain.
