Shyft Network has formally launched its new tool, Veriscope, designed to help cryptocurrency exchanges avoid the so-called “sunrise issue” as they seek to achieve compliance with slowly proliferating anti-money laundering rules.
For years, crypto exchanges have had to contend with the sunrise problem as it relates to the Financial Action Task Force (FATF) travel rule, which recommends that virtual asset service providers (VASPs) and other regulated industries provide details of counterparties in transactions valued at $1,000 or more.
While a survey in 2021 suggested that by the second quarter of 2022, most of the crypto industry would be compliant with the travel rule, the sunrise issue has persisted, as exchanges have worked toward travel rule adoption at varying times, meaning that not all counterparties in applicable transactions were in compliance with the rule as required.
Veriscope enables travel rule compliance while protecting customer data through a peer-to-peer data connection that does not store any personally identifiable information and uses encrypted communication, as well as providing for user consent for data sharing and storage to comply with GDPR regulations, Shyft said in a news release.
“The ‘sunrise issue’ is a complex problem, and only Veriscope has been able to solve it,” Malcolm Wright, head of Veriscope, said in the release. “Governments are deeply concerned about crypto’s use in illicit finance and sanctions evasion in particular — as they should be — and with Veriscope, we are able to offer an efficient, elegant compliance solution for the entire industry.”
Several major exchanges and liquidity providers have already adopted Veriscope as their travel rule solution, including Binance, Deribit, Tether, Huobi, MoonPay, Nexo, Gate.io, Bitfinex, LocalBitcoins, GSR, Galaxy Digital, Coinhako and BTSE Nogle.
“The tool takes a unique, decentralized approach to identifying counterparty exchanges solely from the crypto address. Because we don’t require any additional information from an exchange’s customers, we can rebuild travel rule data on historic transactions,” Shyft Network co-founder Joseph Weinberg said in the news release. “The result is that our client is in full compliance with the travel rule, and the customer experience is absolutely seamless, with no interruption to transactions, but offering bulletproof assurances of privacy and security of customer data.”
