Crypto Travel Rule 2025: What It Is, How It Works, and How to Stay Compliant

What Is the Crypto Travel Rule?

The Crypto Travel Rule stems from FATF Recommendation 16, first introduced in June 2019. It requires Virtual Asset Service Providers (VASPs) to collect and transmit sender and recipient data for crypto transactions over jurisdiction-specific thresholds. Its goal is to prevent money laundering and terrorism financing

How It Works: A Step-by-Step Overview

1. Trigger Thresholds
   
   • Often set at $1,000 / €1,000 (FATF-guided), but can be $3,000 in the U.S. under FinCEN.
     
     
2. Data to Collect
   
   • Originator: Full name, wallet/account ID, address or ID number or DOB
   • Beneficiary: Full name, wallet/account ID
     
     
3. Secure Messaging
   
   • Data must "travel" with the transaction using secure standards like IVMS101
     
     
4. Due Diligence & Sanction Checks
   
   • Receiving VASP screens against sanctions and confirms compliance.
     
     
5. Record Keeping
   
   • Data retention periods typically last at least 5 years.

Real-World Example

Cross‑Border Exchange Transfer

• Scenario: EU-based Exchange A sends 2 BTC (~€60,000) to U.S.-based Exchange B.
  
  
• Process:
  
  
  1. Exchange A collects originator data (name, wallet, address).
     
  2. Exchange B collects beneficiary data (name, wallet).
     
  3. They exchange data using IVMS101 format before or during a transaction.
     
  4. Both perform sanction screening.
     
  5. Data is logged in case of auditor or regulator review.

Use Cases & Jurisdiction Specifics

• EU (MiCA / TFR): Applies to CASPs with no exemption threshold, but requires identity verification for self-hosted wallets above €1,000
• U.S. (FinCEN): Threshold at $3,000+, applies to crypto transfers.
• Canada: CAD 1,000 threshold with specific retention rule.
• Emerging regions: Bahamas, Hong Kong, Australia, Turkey, etc., are either active or en route - Turkey recently added 48–72 hr withdrawal holds if rule not complied with

How to Achieve Compliance

1. Know your thresholds per country (EU, U.S., Canada, etc.).
2. Collect required KYC data on both sides of transactions.
3. Integrate secure messaging protocols like IVMS101.
4. Screen counterparties for sanctions.
5. Log full transaction trails and messages for audits.
6. Adapt UI/UX to incorporate seamless data capture.
7. Plan rollouts regionally, aligned with regulatory dates (e.g., EU’s Dec 31, 2024 start)

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Scorechain Crypto Travel Rule Solution

At Scorechain, we provide a comprehensive Travel Rule compliance platform, enabling VASPs, exchanges, and financial institutions to securely share and verify transaction data while meeting global regulatory requirements.

Key Features of Scorechain’s Crypto Travel Rule Solution

Automated Sender & Receiver Verification - Instantly verify counterparties before processing transactions.
Multi-Blockchain Compliance - Track transactions across Bitcoin, Ethereum, BSC, and more. Risk-Based AML Screening - Identify wallets and transactions linked to sanctions, fraud, or money laundering.
Seamless Integration with Travel Rule Protocols - Ensure interoperability with leading compliance frameworks.
Regulatory Reporting & Audit Trails - Generate detailed compliance reports for regulators.

Next Steps

• Map your regions of operation and check their enforcement thresholds and timelines.

Book a Scorechain demo, explore compliance workflows, and secure your VASP’s future under global Travel Rule regimes.