What is the Travel Rule?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 5 min
In short
The Travel Rule requires the providers on each side of a crypto transfer to pass each other information about the sender and the recipient. It is why a withdrawal screen asks for the recipient's name and what kind of destination it is. Transfers that cannot meet the conditions are sometimes simply refused.
Key points
- Sender and recipient details travel between the two providers
- Each country implements the FATF recommendation in its own way
- It explains why withdrawal forms now ask who the recipient is
- Some destinations simply cannot be sent to yet
Definition
A rule requiring the sending provider to pass identifying information about the sender and recipient to the receiving provider, extending to crypto the practice long applied to bank wires.
A bank wire carries sender and recipient details alongside the money. A blockchain transfer carries none, so the two providers need a separate channel to exchange that information. That channel is what the Travel Rule obliges them to build.
On screen this shows up as questions: is the destination an exchange account or your own wallet, and what is the recipient's name? Whether the destination provider supports the same messaging system can decide whether the transfer is possible at all, and the competing systems do not always interoperate.
Sending to a wallet you control can also mean declaring that the address is yours, or proving it. What is asked for varies by provider and changes over time, so read the current guidance on both ends before moving a large amount.
Watch out for
- · A mismatch between the account name and the recipient name can get the transfer bounced or refused
- · Support and required fields differ by provider and keep changing
- · A returned transfer can cost more than the original network fee