Binance Deploys CipherTrace Traveler

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  • Binance has deployed CipherTrace Traveler, a blockchain monitoring solution to track transfers
  • The software will ensure Binance is compliant with the FATF travel rule
  • Binance has been criticized in recent days for its lax approach to regulatory compliance

Binance has increased its compliance standards by implementing CipherTrace Traveler, a blockchain solution which helps Virtual Asset Service Providers (VASPs) comply with new laws regarding transfers of digital assets. The move, which has already spooked the community, is the result of increased pressure on crypto-handling institutions by regulatory agencies who are keen to crack down on criminal activity through cryptocurrencies, and will likely not be the last such measures taken by exchanges in order to comply.

Binance Responds to Regulators’ Criticism

Binance announced the implementation of CipherTrace Traveler yesterday, just days after the Financial Conduct Authority in the UK questioned the company’s levels of compliance and warned residents not to use the site. The software will allow automatic tracking of cryptocurrency trades in and out of Binance, flagging up any that cross a certain value threshold.

This threshold has not been publicized, but the Financial Action Task Force (FATF) who established the travel rule and extended it to cryptocurrencies in 2019, suggests a threshold of USD/EUR 1,000 globally. Any transactions that cross this threshold will require the recipient’s name, account number, address, and receiving address/institution to be logged for future reference.

FATF Wants to Tame the Crypto Wild West

The FATF ruling in 2019 was met with consternation by the cryptocurrency community and derision as to how VASPs were going to implement the rules on all but anonymous transfers. Through CipherTrace Traveler, Binance will now have to collect a raft of information on crypto transfers which otherwise would have gone unnoticed through their system.

Predictably the news was received badly, with many users threatening to boycott Binance as a result, but those who have been anywhere near the space for the past few years will have known something like this was inevitable. Indeed, this could be just the first step in the authorities’ attempts to tame the crypto Wild West.