Travel Rule Solutions & Tools

Transcript

All right. So, welcome everyone to the Cryptovalia Association. Um, we're actually one of the working groups. My name is Maria Fedak and I am co-chair on the CDA compliance working group and the CDA is the Crypto Valley Association. We're the leading voice for advancing in the global blockchain economy. I will just let you know a bit more about the CBA before we jump into into today's topic. So what is a CBA? For those of you who actually don't know about the CryptoVal Association, it's Switzerland leading blockchain and crypto ecosystem. We have moved now out a bit of Switzerland. We have several working groups in Latin America, in the Mina region, and in other parts of the

world. We're fostering growth, collaboration, and integrity in the global blockchain economy since 2017. and we unite the world's top blockchain and crypto professionals and companies. Together, we work to thrive growth, collaboration, and integrity across the global blockchain economy. We have several events which you can attend to, and you can also be part of one of these working groups and help us um move forward into the crypto and blockchain ecosystem. Our mission is to connect um blockchain technology by connecting a vast network of crypto professionals. We want to collaborate within the crypto professionals and blockchain experts so

that we can collaborate with each other. We advocate for organization for the global crypto ecosystem. We facilitate and shape the conversation with regulators and government organizations. Um we're also part making sure that we help out or yeah we work close um closely with governmental organizations to help shape the crypto ecosystem and the crypto regulations especially if there is something that might harm um the market. We're very on top of it.

We're committed to shaping the future of blockchain and crypto innovation by bringing together the best and brightest visioners, leaders, and businesses. And this is actually why we're here today. We have 11 working groups and today you are receiving information from the AML and compliance working group and we're very excited about this topic. So let me just jump into the topic. just to give you kind of like a quick um teaser on what we're going to talk about today is basically from my experience and from the experience I have heard within the um AML comp and compliance working group is that there are several

travel rule challenges we find within the VASPs. So the first one is actually getting into the identity. So identifying and verifying customers in a decentralized environment because blockchain we're basically moving into a decentralized environment and it's very difficult to identify properly. Then we have some data privacy issues where it's very important to find the balance between the compliance and travel rule requirements with the privacy laws like GD like GDPR in Europe. And this is one of the biggest challenges we have seen companies face with right now. We also have some um challenges in the transaction

monitoring. We're integrating the travel rule into compliance in into the existing transaction monitoring softwares. It's not very easy which is why I am so excited about what we're going to hear today from our panelists. And regulatory variability is different countries have different variations and travel rule implementations and most of the VASPs actually now have to comply with different regulations all over the world if the if they want to go internationally.

So who are we today? Today I am Maria Fedak. I am part of the Crypto Valley Association as um co-chair in the compliance and AML working group. We're three co-chairs and we're very excited to be here today. Then we have La Lura Hildenbrand. She has 10 year experience um in financial services across compliance and internal audits. For the past eight years, she has been working with co Coinbase. She has supported financial crime compliance leading the trouble rule program at mail advisory and the development on the implementation of trust. and trust is the trouble rule universal solution technology which is

exactly what she will be talking to us today. She will give us a quick peek into trust and an ape and show us how security share travel information how you can securely share travel rule information with other bots by providing an inter interoperable userfriendly platform. So thank you Laura for being here today. We're very excited to hear um about trust and to hear about your experience.

And we also have Hana Sakaras. She's head of regulatory affairs at 21 Analytics. Hannah has experience in international crypto experience. She was she um has worked at a leading Nordic crypto exchange. Was a DT talent at Frankfurt School of Blockchain. Sorry. And she has supported financial crime compliance leading the travel rule program AML advisory and the development. Uh, sorry, sorry, sorry, sorry. Um, she is, um, sorry. She was a DT talent at Frankfurt School Blockchain Center and volunteers as secretary general at the digital asset task force.

Hannah, if you can also tell us a bit about that, that would be amazing. If you have a little bit time left, that's very interesting. within the global coalition to fight financial crime. She currently leads the growth and regulatory engagement efforts at 21 analytics. And Hannah will give us a quick demo on 21 analytics and will show us how they have managed to help several of us implement compliant GDPR travel rule solutions all over the world. I am very excited to hear about you and I will give you now the option to share your screen. We will start with Laura and then we will move over to Hannah.

Thank you so much. If you have any questions, please write them in the chat. We will be looking at the chat um several times during the webinar. So whenever you have questions, just write them in the chat and we will go through them during the webinar. Thank you. And Laura, the floor is yours. >> Awesome. Thanks, Maria. Pull up my screen. Excellent.

Well, hello everyone. Um, as Maria mentioned, my name is Lauri Hildebrandt and I work at Coinbase on the financial crimes compliance team. Um, I've been at Coinbase actually eight years to the day. um where I lead AML advisory as well as the development of our travel rule solution trust. Um so this is a a topic that is near and dear to my heart. I know travel rule is a fun but but challenging topic for us all. Um so introducing the trust solution. Um as Maria mentioned it stands for the travel rule universal solution technology.

Quite a mouthful so we we went with the fun um abbreviation trust. Um, and really what Trust is is a coalitionbased solution um of leading VASPs in the crypto industry. Um, so although I work for Coinbase, the Trust Solution is not a Coinbase product. Um, it's not a standard um, travel rule vendor solution. Um really what it is is an industry coalition of exchanges that came together uh about five years ago to collaborate to build our own industry-led solution that really prioritizes data security and privacy.

Um so just as the banking industry about uh 50 years ago came together to build the Swift network uh to exchange transactions internationally, we have very much modeled the design of trust around Swift. Um so just as swift came together to uh you know help international organizations um exchange payments in a secure way uh you know 50 years later that is very much um what we are looking to do in the crypto ecosystem. [clears throat] Um so really important to to highlight that really trust was designed by the industry and for the industry. Back in 2019, both uh the FATIFF and Fininsen and other

regulators um including in Switzerland were really focused on how can the industry come into compliance with the travel rule. I think there was um a lot of discussion by exchanges at the time highlighting as Maria did all of the challenges that really apply to travel rule um in the crypto space because of the nuances of how crypto networks um are designed. So because they are decentralized permissionless open networks um it's very different than the way banks are moving money on um essentially closed private networks all around the world. Um and so we really uh set out at the time to look at the travel rule vendor landscape to see could we as an industry align on

implementing a specific solution um that really met our our both our compliance needs but also our data security and privacy requirements. um because as Maria mentioned that is really a top priority when looking at how to choose um a specific travel role provider to implement. Um so at the time um we really didn't find that there were vendors on the market that met our security and privacy needs and so we decided to collectively build our own solution. Um obviously not for the faint of heart. This has been um you know a lot of work and effort has gone into designing this. Um we decided to do it together because ultimately travel rule requires cooperation by your

counterparties. You need to be on the same system um in order to actually not just identify uh which blockchain wallets they're using but then have a secure way to exchange the information with one another. Um, so at the time, Coinbase and a number of other leading exchanges, um, Kraken, Gemini, uh, Fidelity, and several others, um, collaborated as a working group to design what we thought would be, um, a reliable way to identify one another and exchange travel information.

That led us, um, into building what is now trust. Um and some of the really key features that are important to highlight is we built this as a a notfor-profit initiative. Um I think for all of us we were really interested in how can we design a solution that allows us to meet our compliance needs without sacrificing um the very important uh data security and privacy that is needed to protect our customer information. Um we also wanted to design a solution that was accessible to vasps of all sizes. Again, at the end of the day, in order to be a successful solution, you need to um have as many of your counterparties on a particular solution as possible. Um and therefore, we wanted to ensure that

things like cost were not a barrier um to have members join us. We also built in um very robust data security and privacy standards. As I've mentioned um we looked at travel rule as um you know how do we minimize the exposure risks for our very sensitive customer PII data because travel rule requires us to share this information with other exchanges all around the world um with different privacy requirements and their respective jurisdictions. We wanted to establish um kind of common global standards for trust to ensure that when we're sending our very sensitive customer information that the counterparty on the other side has a way to appropriately safeguard it. Um and

really looking at how we could minimize the centralization of travel rule information itself which I'll touch upon later in the deck. And then finally, really what what I call the secret sauce of trust is um the way that we've designed in order to actually identify the counterparty. Um as Maria highlighted, this is often probably the biggest challenge in the crypto space. Um customers are accustomed to coming to your exchange and and saying, you know, here's my the crypto wallet address that I want to send to. Um you know, as a financial institution, having to figure out who actually controls that wallet address. Is it a self-hosted wallet? Is it um held by another exchange in in um another country? That's ultimately um

one of the most difficult uh considerations of being able to comply with the travel rule. And so the way that we've approached this from a trust perspective allows a sending basing the travel rule information to the right counterparty. Um so because we really designed trust from an industry-ledd perspective really by VASPs and for VASPs we feel that we've been very successful um in growing what has become one of the most extensive coverage networks of of any travel solution on the market.

Um here you can see our membership. Um so uh you know as I mentioned we have VASPs from all around the world that are a part of trust. Although we originally started the working group um in the United States, we very much designed trust to be a global solution. Ultimately, travel rule is a global requirement. Um we've obviously seen over the past five years since we initially built trust, travel rule be rolled out in a number of different jurisdictions. Um so today we have over 170 members which are financial institutions that um operate across 33 different jurisdictions. Um, we have members in both the US, all across Europe, both in the UK and across the

EU, in Singapore, Japan, Canada, Bermuda, etc. Um, so really wanting to enable VASPs to have a solution that they can use across um all the different legal entities that they operate in, all the different countries to ensure that they have a single solution that allows them to comply with uh requirements in any country. Um, as Maria mentioned, there are different requirements in different countries. That that's also what makes um, travel rule so much fun. Um, there are different thresholds, different data points that are required. Um, different expectations around how the data is actually sent, when it's sent. Um, and so we had to design trust in a way that was flexible enough to allow for VASPs to meet their requirements in any and all

jurisdictions. Um, you can also see here, uh, just an overview of some of our our largest members. Um, so again, you know, Coinbase, Kraken, Robin Hood, Revolute, Gemini, Circle, Cash App, Crypto.com, um, the list goes on and on. Um, really not just a large number of organizations, but many of the the largest crypto exchanges and VASPs from all around the world. Um, we've also attracted more traditional financial institutions um, into trust. So we've had a number of um large banks join us including um BNY, Bank of New York Melon um as well as uh players like Fidelity and PayPal. So um really just a a great

endorsement from the traditional financial institutions as well um that they you know believe that the security um and privacy protections that we've built into trust um are uh you know important to them. Um and that's why they've ultimately decided to leverage the trust solution. Um really just want to emphasize here that you know in just a few years between 2020 and now um we've really moved the industry from essentially zero travel rule compliance to very substantial travel rule compliance where we're able to exchange securely travel rule information all around the world.

Um really that that's to us no small feat. Um, you know, if you can imagine how difficult it is to negotiate and build a complex tool with just one of your competitor firms, um, let alone doing this with dozens of other companies. Um, you know, I think ultimately what that allowed us to do was to leverage, um, really the the intellectual brain power from the best engineers in the crypto industry, the best lawyers, compliance professionals, and collectively design a solution that will work for the entire industry. Um, jumping ahead here. So, as Maria touched upon, these are some of the core challenges that we as an industry face when applying the travel rule to crypto.

Um, as I mentioned, the counterparty identification is is often um, one of the most difficult challenges and there's a variety of different ways um, to go about solving for this. Um, and on the next slide, I'll talk a bit more about how trust does it. Um, the next piece was the actual data transmission. So once you can actually figure out if if you can figure out who your counterparty is having a secure mechanism to actually share that information um at the time that we built trust there really was no infrastructure across the industry to securely share travel information. Um obviously the information can't be sent on the blockchain itself. Um, and so we had to essentially design the infrastructure to be able to securely send information um,

in a way that we felt was um, appropriately designed from data security and privacy standpoint. Um, and then finally the sunrise issue which I'm sure you are all familiar with. Um, but again the challenge that not every jurisdiction has implemented travel rule yet and travel rule requirements um, vary very widely across countries. So really again important to build a solution that that would solve for those challenges and and provide flexibility. Um so diving deeper into how trust actually solves these challenges. Um so really first is around counterparty identification. Um so as I mentioned trust leverages a mechanism that we feel is more accurate and secure than relying

on things like blockchain analytics or customer input. Um, you know, obviously blockchain analytics is a very important tool in the overall um, financial crime compliance toolkit, but from a perspective of wanting to be 100% positive that you've been able to identify your counterparty to ensure that you're only ever sending travel rule data to the right counterparty. Um, we wanted to design a system that really gave us that 100% confidence. Um and so trust uh essentially provides an API based bulletin board system where crypto exchanges are able to securely provide uh the wallet addresses that they own.

That way when a sending institution um is looking at a particular blockchain wallet, they're able to query that bulletin board system to determine if that wallet address is registered by another trust member. Um, if that wallet address is registered, the uh receiving institution that registered it has to actually provide a digital signature to cryptographically prove that they own the wallet address. Um, this is all done um in real time. So essentially uh receiving institutions are continuously updating um addresses that they own on the bulletin board. Therefore, a sending institution is able to reliably identify them ahead of even initiating the onchain transfer.

Um that bulletin board also provides um a uh set of secure instructions in order to send the travel rule information on a peer-to-peer basis directly from the sending financial institution to the receiving financial institution. Um so that data exchange is done again in real time. It's fully automated and it is um not being passed through any central intermediaries. So while other um travel rule solutions often operate in a model where the travel rule information is um you know centralized through their entity, this information is directly sent from um point A to point B from the sending institution to the receiving

institution. Um and the data is not centrally stored on trust which ultimately reduces um you know the risk that this data becomes a a target for hackers. Um third, the trust solution also provides a way for trust members to be able to automatically share data in a secure way with non-rust members. So this is a really important development um that we built about a year and a half ago. Um we call this flow trust hub and what it allows is um for integrated trust members. if they're able to identify a counterparty institution through things like blockchain analytics or customer input, um they are able to use trust to essentially securely uh

make that data available to the counterparty VASP. Um the counterparty VASP receives an email notification um and a tokenized link where they can securely access the travel rule information directly from the sending institution. So again really trying to build in those same security and privacy protections into the trust hub flow as well. And then finally um the legal and governance framework that trust provides um helps establish a secure network of VASPs. And so um we have an onboarding um and ongoing due diligence process that we apply to all members. Um we've obviously seen travel rule requirements around the world um require counterparty due diligence and so we wanted to really

take an efficient um and standardized approach here where as every member joins trust they have to um go through a review by an independent third party. Um that way when a member joins all of the other members have the confidence that that member has the appropriate um privacy and security and compliance controls in place to be able to um safeguard that information. So that is a highle overview of of trust and how it works. Um, you know, I'd just like to emphasize here that, you know, travel rule is obviously very challenging and it's continuing to evolve as we see more countries implement um, requirements.

Really, we've designed trust in a way that is uh, intended to give VASPs the tools that they need to be able to meet the requirements in their specific jurisdiction. um at you know the way we see trust is really almost like the the telephone wires to be able to connect to other institutions all around the world in a secure way. Um you know we're we're really continuing to focus on growth here. Um we do understand that having um you know as many of your counterparties on a particular solution as possible is is very um useful and ultimately allows you to um form those communication channels. So we are very much laser focused on um continuing to to grow trust and making it um you know more uh

accessible to vasps of all sizes in the ecosystem. Um so we're very excited um really looking at how we can not only add new members but also strategic partnerships with other providers in the space. Um so um this I think will be a great transition point um for for Hannah from 21 Analytics to talk more about um how we are collaborating on um you know a partnership of exploring how we can leverage providers like 21 Analytics to make trust even more accessible um to VAS from an integration standpoint. So with that I will um end my portion and um I'll turn it back over to Maria and Hannah. So thank you everyone.

>> Thank you Laura. so much. Um, Laura, we have actually two questions. Would you like to address them right now or should we wait until Hannah is finished? >> Oh, three. [laughter] >> Yeah. >> All right. So, the first they're actually very difficult questions. So, I'm happy you're here to answer them. So, how many are actually live and using trust, not just logo signed? As I was told, it is extremely hard to implement. >> Yeah. No. Um so of the the members um we talked about um the majority of them are live um and so really what we found is um for VASPs joining trust uh there's integration work in order to plug into

the APIs but ultimately what that gets them is a fully automated uh you know real time solution that is secure um in order to actually exchange the travel rule information. Um we also through the launch of um the trust hub solution that I mentioned um have built additional tooling around the integration to make it even easier for members to plug in. Um we've really seen that as a big boost to uh you know aiding our members to actually fully go live. Um and then Coinbase as the operator of trust we provide extensive technical support to our members in order to help them with their integration process. So we've helped you know at this point um you know dozens and dozens of entities uh

with their integration process. So you really vasps of all sizes and business models. Um you know we have large players fully integrated like um you know the PayPal and the OKXs of the world um as well as very small institutions um that we've partnered with to ensure that they have the right um support needed for the integration. Um, and then I think this will also be a nice segue and to Hannah's portion, but we're also looking at, you know, how can we partner with other providers in this space that are already serving uh, many VASPs from, you know, different elements of their their travel rule compliance program, including self-hosted wallet ownership to make the integration um, you know, easier if they if they need that.

Then we have another question that I believe could be answered um by Hannah during her presentation because it I think it's just kind of like something that you might get constantly as a question. So FAD mandates that you can't rely on independent third parties on due diligence. Um so isn't that going against that? So I think Hannah you might answer that most likely during our presentation. So let's just move over to you and we will take the next the the third question we will take it um at the end so that Hannah still has time to do her presentation as well. So Hannah the floor is yours.

>> Okay. Thank you. Thank you Maria. Thank you Laura. I cannot screen share Laura. I think you have to just >> Sorry. One second. >> All right. You should be good now. >> There. Yes. Uhhuh. Please let me know if you can see my screen. Oh, good. >> Yes, we can see your screen. >> Great. Okay. So, uh thank you. Thank you. So great to be here along well at CVA which we have been collaborating for some long years already and also with Laura and Coinbase. So we've been collaborating successfully for the past

couple of weeks or and um great to be here. See some familiar names. Um so I guess Trust is and Coinbase are names that you all probably already know quite well uh about 21 Analytics. Just a quick uh on on us. We are Swiss technological provider for for travel rule. Uh we have been founded in 2020 by well security experts uh Switzerland. So um what I will talk today is more or less give you a sneak peek of what's coming um also why uh between 21 and trust. And um to start with I'll get into a little bit of context on the

travel rule and why this topic is super important. Um currently we are seeing quite some prioritization of this of these regulatory requirements uh internationally. There is a very important push happening by uh the international global standards um to implement the travel rule in in in local jurisdictions. Right. Uh so I brought here a bit of numbers. So the number of countries that have implemented the travel rule has been growing quite steeply. Uh in 2024 it almost doubled from 2023 and we expect to see something around 100 by the next update by by FHF.

Um and if we have CVA members here uh they will remember that Switzerland was an early adopter uh which had might have been a challenge back then. Uh so FHF published the update I believe in June and then by the end of August uh FEMA already had this guidance out basically telling the the industry that uh it was it was a regulator that was technological neutral. So it means that the obligation uh of collecting and exchanging data uh that was already in place for traditional finance also applied to the uh blockchain uh

business models that were uh already live in Switzerland and it went a little bit above uh what FHF had put out uh at that time basically obliging the verification of self-hosted wallets uh so the that crypto companies would uh know who owns a wallet before allowing transfers with uh with that blockchain address. And this is exactly also one of the requirements that led into the development of one of our most uh popular products uh which is for the seamless verification of self-hosted wallets where you can just uh request verification from a customer with one

click. I'll talk a little bit more about that in the end. So I guess I think Maria and a lot already covered quite quite well the the issues and the challenges that the travel brings uh and probably those who are who have joined us here already are quite familiar with that themselves. But basically uh it's a very fragmented market. Unfortunately we have been working to uh be uh less fragmented or more interoperable for five years now. And and this has brought us to a situation where crypto companies usually have a great number of transactions that are pending or blocked or uh they cannot um find the cont the proper counterparty to go on with the

transaction as it was before the travel rule. Uh another very important issue and actually one of the main reasons this company was founded was uh the the sensitivity of the data that is required to be shared with the travel and I think Flora already uh touched uh on this but basically uh if you have been in the market looking for solutions you'll see that most the most popular solutions uh most popular way to go about it is just basically start a platform where all of your customers can talk to each other through your infrastructure. And we uh back in 2020, we thought uh this was not a

sustainable way to for the crypto industry to go to move forward. We would be not only bringing in the intermediary there but also um in in the long term basically build an accumulation of very sensitive data on the hands of a specific solution providers that are not directly uh related to the customers themselves. um which leading leading to decentralization of data would definitely come with the risks of hacks and becoming a very interesting target.

Right? If you're talking about people's identities, tying those identities to the blockchain addresses, having like uh physical addresses on uh on the hands of a centralized database uh could or would definitely bring very uh big interest to for targets and hacks themselves. And of course this as any other AML regulation brings a burden and friction to the customer and we wanted to minimize that. Uh I think we already uh covered this quite extensively but maybe just to um make it a bit clear is that the originator VA wasp in all the travel solutions usually uh they will collect

the data the required data uh on their user and also on the beneficiary of that transaction. They will send this to their provider that of their choice and this provider will usually find the the counterparty who must where it this data must be forwarded to. Of course uh there it comes one of the challenges that we talked about where the uh transactions might be disrupted if the customer if the counterparty vasp is not part of this uh travel solution and also of course this information is held processed and stored by the provider at this point in time. uh both 21 analytics and trust share a view uh since the

beginning which is a little bit different is to provide peer-to-peer data exchange. So direct that exchange from one side to the other instead of us sitting in the middle and forwarding this information. And we think this is the key here uh uh to this collaboration uh important an important point what we are doing as 21 analytics is giving you the tools to be able to reach and be reachable by your counterparties. So uh basically teaching your systems on how to write the letter in a proper way so that the other site can read it without us having to tell you who is on the

other side and giving it to the other side. Uh so why are 21 analytics partnering? Uh that is exactly this point. Uh we're we have the shared value to keep data protected. uh we our software is has been serving Swiss VAPs uh and Swiss banks for for a long time and those uh banks are not uh willing to share their very sensitive customer data um with providers that are uh elsewhere outside of Europe for instance or that have uh more difficult ways to uh supervise the their data policies and protection. So with us what we allow them to do is that they hold the the travel data at all

times within this VASP be it on the sender or or on the um receiving side. We are committed to interoperability. We have been doing this for for the past five years. one thing to uh be build a travel ecosystem that is open that allows different uh parties to work together and not a pay-to-play kind of uh uh um platform that if you are not a customer you cannot no actually with uh with trust and with 21 analytics even if you have your own uh implementation and you want to transact with firms that are using 21 you can still do it even if you're not a customer of us and we actually think this is pillar very

important for travel compliance to grow grow sustainably and finally we are accelerating travel adoption. I think uh as Laura uh took the last question there u about the difficulty of implementing trust. I mean this is a technology that was developed by the biggest uh uh most uh most frequent u uh transactions uh companies in the world. So they have extensive technical resources that not all smaller crypto companies that uh um uh on that are on today that want to be compliant with the travel will have and these smaller companies uh or of

different sizes. They could not uh have the the resources to do so by uh signing up to 21 Analytics. would still be able to connect to trust but having it already kind of uh done for them just uh connecting to their systems on their side and I think that uh goes to to show our well how 21 analytics solution works basically we enable you to transact in whichever digital assets more than 2,000 that are supported within our technology um we also have the solution for self-hosted wallet verification that uh uh connects to more than 500. Uh uh we are we really strive to have a great

user experience for your user here because this is also a very important part of travel compliance that you don't u overlook uh on your transactions and of course the part with the partnership with trust then you are going to be connected to five of the top five global vast but also many many others as Laura has shown. Um finally how it would work basically um you would have to go through due diligence and join the network as as Laura mentioned. Uh here the trust is very important so that the other the other members of this network can have the confidence to share their users data

with you. Um because it's not only uh uh risky to share with your provider who sits in the middle if if you have one, but also uh make sure that you are sending to a proper entity that can take care of your customers data just as well as you would. And then you would integrate analytics in your processes. We have a varying time to that. But basically it makes it it it kind of brings down the level of difficulty on the technical side or the level of efforts that you would have to input and then you can transact with the world's biggest vasps uh by connecting to trust.

Thank you. I think we touch on the the questions. >> Thank you so much Hana. Um, let me just go back to the questions. Um, so you can choose either Lur or Hannah can answer this one, but if FATF mandates that you can't rely on independent third parties due diligence. Um, so how isn't it something that it goes against um using trust or using 21 analytics?

Laura, do you want to start? >> Sure. Yeah, I'm happy to take that. Um, so really the due diligence onboarding process that we've built for trust um is essentially what the network has established as the minimum baseline standards from a data security, privacy as well as a compliance standpoint to actually join and give you that comfort that when you are sending out information that it is going to be safeguarded appropriately by all of the other members in the network. Um, and so it's not intended to replace a VASP's own obligations to conduct due diligence on their counterparties. Um, I think at the end of the day, you know, again, going back to this idea that like trust is a tool and providing the

communication lines for uh the VASPs to be able to connect to one another in a secure way. um it is not um you know a replacement for the actual internal um you know compliance due diligence controls that that VASPs need to have. Um and so you know for example all of the trust members um are you know encouraged and allowed to do their own independent due diligence on their counterparties. Um I know that in the crypto space can take a variety of different forms. Um, in general, regulators have not been overly prescriptive with how to actually do that counterparty due diligence. Um, and so many exchanges are utilizing things like um, Wolfsburg style questionnaires

um, to assess their their counterparties from an AML um, and sanction standpoint. They're looking at things like blockchain analytics providers and how um, they can provide insight to the onchain risks that um, a particular counterparty might introduce. They're looking at things like do those counterparties rec require KYC for their customers, you know, do they do sanction screening? How are they licensed and regulated? Um and so ultimately although the trust due diligence process has made it more efficient um to ensure that everyone in the network is held to the same standards um you know ultimately from a a due diligence standpoint where it's required in a particular

jurisdiction for a VAST to to go beyond that point um they're they're definitely able and welcome to do so and then they have that network and those points of communication to be able to work directly with the counterparty vasps in the network. Um so really we've seen this as a very positive thing. We've gotten a lot of um good feedback from the members that uh it it makes it easier for them so that they're not having to go out on day one of joining a solution and figure out their own plan for diligence from a data security and privacy standpoint. Um so you know ultimately our our process leverages um things like the SOCK 2 or ISO 2701 standard really universally accepted standards around data privacy and

security. Um again establishing that baseline so that they don't have to on a bilateral basis do that full um deep dive on on um those components of another counterparty's program. So really gotten a lot of good feedback on this piece. We we've heard from a lot of members that this is um an important reason that they chose to join trust in the first place that they're really um given that comfort that everyone is held to that same universal standard. >> Thank you so much Laura for that answer. We have many many many questions.

[laughter] We have 11 questions so far. So I will try to go through them because we only have 15 minutes. So we will try to go through them as fast as possible um to be able to answer all the questions. are all very interesting. Thank you so much um for sending the questions and and for being so active. So the next question I believe can be also answered either by you or or by Hannah seems to describe the beneficiary are giving IDs. Same for payer also traveler requires ultimate payer and beneficiary not just legal owner of the wallet. How is that catered for?

I'm I'm also happy to to jump in on that one. Um so if I understand the the question correctly, um so in what I described previously about how trust works, the bulletin board essentially facilitates counterparty identification so that if you know Coinbase is sending a transaction to Kraken, for example, that we're able on the bulletin board to figure out that Kraken um you know essentially is the other financial institution on the other side. From that point, when the actual travel rule information is shared on a peer-to-peer decentralized basis, the sending institution is essentially um encrypting all of the relevant travel information both about the payer and the payee. Um

they are then encrypting that with the public key of the receiving institution and then sending that directly. So from a from an actual like data requirement standpoint um you know trust and and 21 analytics all of that relevant and required information is is sent directly from the sending institution to the receiving institution. Um and the actual data payload itself is flexible where um you know we leverage the IBMS 101 standard which has been fairly universally accepted in um the travel rule space where um if there are additional fields that are required in a certain jurisdiction um those are able to be shared as well.

>> Um perfect. Thank you so much. Then we have another question. Would you like to take that one Hannah? The next one, >> which one are we taking? >> There are many other protocols like verify pass, sigma code, gtr. >> Yes. Okay. Uhhuh. >> I thought that was more of a question for you. Um, even though it says question to trust, but there are many other protocols where if I vast, sign, GTR, and also aggregated like sums up. Do you have plans to integrate directly with either because I know you have some ideas on that as per my understanding from the from >> from 21's uh point of view we have been

as I said in the beginning um working for towards interoperability since maybe five years building our own technology um uh that was open and for collaboration with other providers in the space um and actually we have this uh TRP which is an open uh source open standard that anyone can just implement be it vasps or be its solution providers. of these allows uh them to connect with the Vasp that are using 21 and we are also openly in collaboration with uh other other solution providers in the market which is the case with trust for instance and we have been uh talking also with DR and other other um

players in the market because we understand that interoperability is key here uh as we have been uh working towards open standards since since the past five years. So um vasps are uh encouraged to look into uh the the solutions available to them. Uh if not uh with the resources um available in internally to implement it themselves then uh yeah there's there are tons of of solutions available. Unfortunately at the moment not all of them are interoperable but hopefully we are working towards a more interoperable world.

Thank you so much. Um that is actually very interesting. I will take quickly the next question. Um you can correct me if I am saying something that is not right but what is the payment value threshold for which travel ru is mandated? That depends completely on your regulation, right? Um so it depends on the regulation where you're at and the regulator usually tells you what um the requirement or the threshold is to comply with travel rule. But as per our experience, it is basically best to comply with travel rule from the start.

But if you can add something to that, I would be happy to um hear it. No, as you said, it uh changes uh from country to country. In Switzerland, it's it's at zero and Europe it's also at zero. Um and definitely agree with you on consider this when uh starting out your business because it it has impact on your operations. Definitely. >> All right. Um there are so many questions and they're popping up.

[laughter] I don't even know if we will be able to tackle them all but um what are the advantages of a vast integrating with 21 analytics instead of going directly with trust you can choose who wants to [laughter] answer that >> should I start or you do and then I can compliment >> yeah I mean I'm happy to start you know I think for us and I think this goes to the other question too around interoperability um I think from the trust perspective perspective. At the end of the day, our primary goal is expanding compliance um and really helping trust members to reach as many of their counterparties as possible. Um and as I mentioned before,

like we're looking at all different ways of achieving that goal. Um both from the perspective of just expanding trust organically, bringing in more members, um as well as looking at strategic partnerships that help achieve that end goal. So I I think for us um you know because of the fact that with any solution you're going to have to do an integration. So even with these like software as a solution tools I think they really sell themselves as this is going to be a very like plug-and-play integration. It's not going to require complex technical work. I think ultimately that's not true. I think every VASP has to go through the process of integrating travel rule into all of their internal systems. Um, you know, I

can definitely speak from the Coinbase perspective that, uh, you know, all of the internal components of an integration with Travel Roll often are are far more difficult than actually just plugging into something like Trust or a vendor because Travel Roll has to be embedded within your all of your core payment flows um, into how you actually initiate onchain transactions. um how you sign for wallet addresses, when you credit funds, if you uh delay crediting funds or take any sort of action, and then how the actual travel rule information is fed into all of your different compliance systems and tools.

So things like sanction screening, transaction monitoring. Um that can often be very challenging for VASPs, even large VASPs that have a lot of technical resources. Um, and so, you know, I think over the past year, we've been looking at who are the other networks out there that would help us achieve our goal of expanding counterparty coverage in a way that doesn't sacrifice the very important data security and privacy controls that we've built into trust. Um, so, you know, when you're essentially building a chain, you're only as strong as your weakest link. And so for us um you know we are not looking to integrate with providers that are centralizing uh customer PII data. We see that as really

kind of the the opposite of our goal really that ultimately puts more customer data at risk. Um and so um when you know we've really determined that like we have a fundamental alignment with providers like 21 Analytics because we are aligned on the same principles that we want data to be shared on a peer-to-peer basis which not only protects you know Coinbase's data, Kraken's data, but it really protects the entire crypto ecosystem. Um, and so, you know, I'll turn it over to Hannah, but I think the idea here is for VASTs that do need additional technical support for integrating with trust and they want to leverage features um that, uh, we don't currently provide today.

So, things like, you know, a user interface, dashboards and tooling, self-hosted wallet verification. I think our tools really complement each other very well. um and not only provide that integration support um but a suite of other um you know features that that are important to VAS as they think about their um holistic travel rule compliance program. But yeah, please please jump in Hannah. >> I I think you already covered most of it and exactly we complement each other very well. uh as as we had the question about the due diligence in the beginning. uh our solution for instance would not put any due diligence and allow anyone to to transact but okay maybe should we not uh bring it to a at

least a base level where you know who you're trusting with this data and then of course you can build on top of that your decisions on how to evaluate the other the other uh points on AML and data security that you would like to have extra to what trust is already providing but trust is bringing everyone to kind of a base level and that is what 21 analytics for instance didn't have but what we do have it's like an easier onboarding process as Laura already mentioned then uh I tried to touch a little bit on on the presentation is like there it is a a a product or a solution on top of the the network so it really brings the level of

effort that your technical team would have to to to have to implement this and translate this into your systems because we are already kind of bringing to you what is the the basic or or the standard way that was to use it as as as Laura mentioned that this is a not for profit uh initiative by by the this coalition right by this network. So for them, of course, it's more important to make sure that the the security standards and the policies are all in place and that we have a way or rules on how to communicate with each

other on a peer-to-peer basis more than actually uh uh build all the user interface and make it easier to to use on the day-to-day which is what we have u added as our expertise on this site. Right. And as Laura mentioned, the self hosted wallet to complement and so on. >> Thank you Laura and Hannah so much as we only have three minutes left. Um I don't think we can cover all the 10 questions that are missing but most of them there are a lot of questions that are related to each other where it's basically questions about how 21 analytics works and how it works together with trust and how it can be implemented how trust is implemented in 21 analytics and um and

if you actually have to basically have both integrations into your in into your platform for if you have to integrate both of you can do it through one and that will cover I think almost half of the questions and then we can move to one last questions. Hopefully you guys can stay a bit longer. Um maybe five minutes longer and then we will just wrap it up and I would be very happy if you could share your data um yeah your information your links um with everyone so that if someone else has an additional question or specific questions about pricing and so on and so forth they can maybe book a meeting with you directly. Um all right thank you. So

Hannah and then I will find a good question for Laura and then we'll wrap it up. No, I think I think both of us can take that last one and and then we're going to be a bit out of time. Um, but maybe I'll start just Laura um how how to to integrate uh talk to us, talk to 21. We will help you uh guide you on on what you have to do. But basically that was one of the slides the one two three slide there that I showed. Basically you need to do the dense with trust. you you must join as a network member. Uh and then you would be able to connect to trust via the 21 analytics software without having to do any

technical integrations on your site. Uh so basically it is um this is how the the the integration works kind of bringing it uh bringing access to the trust network to you via 21 analytics in a in an easy way. Laura, maybe you want to add anything? >> No, I mean I think that that really covers it. Um I you know I think ultimately you know VASPs have options in terms of like obviously we've had a lot of members come and directly integrate with trust. Um I think this new offering to Hannah's point will allow a VASP to um kind of partner with both of us where the actual integration um can be done in in partnership with 21

analytics that will help um plug that VASP in into the trust protocol. Um ultimately I think the way we've envisioned the partnership is that um those VASPs would still become trust members. they would still go through the onboarding due diligence process and become a member to kind of the central governance framework um you know but ultimately you know have that option if they need the additional technical support and and plugging into the different different features that 21 offers. So we're really excited about this. Um I know there's obviously been a lot of discussion around um interoperability and partnerships and and this I think is a big step forward in um kind of joining forces and and making travel rule more accessible to

vasps all over the world. Um and again I'll just emphasize I really do think that the model that we've taken from a trust and 21 analytics standpoint um is is very different than the other vendors in this space which operate as you know ultimately for-profit ventures. Um they are looking to make money off of travel rule compliance. Um we have done this because ultimately you know Coinbase we are a crypto exchange with our own travel rule obligations at the end of the day. um we understand firsthand the complexities and the difficulties of complying with travel rule, you know, not just in one country, but when you're operating across dozens of countries and and with dozens um you know, hundreds, thousands of different counterparties.

So, you know, we really do bring a a vast perspective. And I think what um has really brought trust and 21 together is our our shared um principles around data security and privacy and and preventing travel rule from becoming a systemic risk in the crypto space through these um centralized vendors. Thank you so much to both of you. Unfortunately, we're out of time. I would love to take more many more questions. Um there was just one question that I would like to finalize this with and it's about how um the trust framework or just in general how does um travel rule solutions allow regulators to verify um compliance and

in addition to that are there any specific requirements you have when you allow someone to be a member and trust like what what do you check um to make sure that they are actually governmental compliant clients in their own country. >> Sure. So we so the way trust is designed is only the actual financial institutions that have travel obligations are integrated with the solution. Um so external regulators law enforcement are not able to directly integrate with trust. Um they ultimately you know regulators law enforcement are engaging directly with the VASPs that they actually have jurisdiction over. Um so you can think of this as um if your

organization is going through an audit um or an exam with your particular regulator um your regulator would ask you um to show evidence of your own you know compliance with the travel rule for for the specific um requirements that apply to you. Um, so they would look at um, you know, you would kind of walk them through your end-to-end travel rule compliance program just like you would your, you know, transaction monitoring system or your sanction screening. Um, and then you would demonstrate, you know, here are the kind of policies and procedures we have around travel rule.

Here's the tool that we actually use to exchange the information, something like trust and N21. Um, and then, uh, if there are specific data requests that the government, uh, or the the regulator would like to see in order to actually like test your ability to comply, the VAS themselves would have access to all of that data that they've either sent out or received because they're actually a party to that transaction. They would be able to make that information available to the relevant regulator. Um, so again, none of the actual travel rule PII data, the customer information, none of that is centrally stored on trust or 21 analytics. It's all done peer-to-peer. And so ultimately, regulators are working directly with

organizations ju just like they would in in, you know, any example of using any travel rule provider. They're not going to the travel rule provider to say, you know, show us that Coinbase is complying. They're working directly with the VASPs that they oversee. Wonderful. Thank you. Hannah, would you like to add something? >> No. Which is a good thing, right? I don't think we want the regulators to be able to well supervise via reg tech providers. I think >> agreed.

>> That's Thank you so much. I think that's a great closing line. Um, so thank you everyone for being here. Thank you for the last 48 people who stayed until the end. This is amazing. Um, please Hannah and Laura share your information on the on the chat so that if you need any information on them, if you need to know anything about um some additional information about 21 analytics or um about trust, please contact them directly. And thank you so much for being here. Thank you Hannah and thank you Laura for your time. It was an amazing talk today. I really enjoyed it and learned a whole bunch more than what I knew before.

So, thank you guys. Bye-bye. Have a wonderful day.