FAQs on the Travel Rule: Everything you Need to Know

Travel Rule
First published
March 16, 2022
Last updated
June 21, 2022

In June 2019, the Financial Action Task Force (FATF) extended the “Travel Rule” to Virtual Asset Service Providers (VASPs). According to this rule, VASPs like Hodlnaut are required to share information with one another just like banks have done over the years. 

As per the FATF recommendation, the Monetary Authority of Singapore gave effect to the Travel Rule under the Payment Services Act by incorporating the Value Transfer requirements in the MAS Notice PSN02 on Prevention of Money Laundering and Countering the Financing of Terrorism – Digital Payment Token Service. Therefore, all payment service providers, including Hodlnaut, must comply with the requirements.

While this has created a lot of speculation among investors, there isn’t anything to fret about. Here we discuss everything you need to know about the Travel Rule and its effect on Hodlnaut users.  

What is the Travel Rule, and How Does it Work? 

The Travel Rule needs VASPs to communicate with one another when a customer wants to transfer cryptocurrency between them. Similar to the obligations imposed on the banks, the VASP responsible for the crypto is required to share certain customer and transaction information with the VASP that is receiving the crypto. 

This information exchange mitigates the risk of crypto being used for money laundering or terrorist financing as the VASPs know where their customers are sending the crypto to and receiving crypto from.

What Does This Mean for Hodlnaut Users?

To comply with the Travel Rule, Hodlnaut users are now required to provide supplementary information when they transfer digital assets from Hodlnaut to a different address or deposit the digital assets as well. The details such as user code, VASP code, and recipient address will be required.

To meet the Travel Rule obligations in Singapore, Hodlnaut is working with Sygna and Trisa. Both the companies help Virtual Asset Service Providers in meeting the regulations like the Travel Rule requirement. This ensures that your Hodlnaut experience is hassle-free and that your data is stored securely.

In view of the above, Hodlnaut will ask its users to input information provided by the beneficiary VASP when making a withdrawal if the exchange supports Sygna. Likewise, for depositing crypto into the Hodlnaut wallet, users have to key in the information provided by the originating VASP.

How do I comply with the Travel Rule?

The Travel Rule applies to Hodlnaut users, and we will communicate the steps needed to comply with the Travel Rule gradually. All changes with respect to the user interface will reflect on Hodlnaut app updates in the coming weeks. 

FAQs

1. How will the Travel Rule impact transactions with Non-Custodial Wallets (such as Metamask, Trezor, or Ledger wallets)?

For Non-Custodial Wallets, users will need to select “Private Wallet” in the Destination drop-down to carry out the transaction. You may proceed to add the Recipient's Name, Wallet Address, and other details as usual. 

2. How will the Travel Rule impact transactions with platforms or exchanges which do not have a User and VASP Code?

For transactions with platforms or exchanges without a User and VASP Code, we understand that you will not be able to input the codes at the moment as they are not available. For now, these transactions will still be processed as usual. However, the team will work continuously with other VASPs and regulators to ensure that transactions can be processed seamlessly via Sygna Hub as much as possible. In the meantime, the team is also working on other aspects of the Travel Rule to ensure that we can meet the requirements of the regulators.

3. How will the Travel Rule be implemented on Hodlnaut?

Hodlnaut will gradually implement these new features in phases, and we will inform our users as we move along. Users will always be informed ahead of time before the implementation takes place so that they can be sure of what to do with their funds. We will never restrict withdrawals or user funds without any valid or concrete reason. Please refer to our Terms of Service for more details: https://www.hodlnaut.com/tos

4. Do all Hodlnaut users have to be Travel Rule compliant to continue using Hodlnaut’s services?

The obligation to adhere to MAS regulations set out in the Notice PSN02 under the Value Transfer Requirements and Travel Rule lies on Hodlnaut as a VASP and Payment Service Provider. Hence, the Travel Rule implementation will apply to all Hodlnaut users, regardless of their residency. We understand that other cryptocurrency and digital assets exchanges are also aiming to adhere to their respective Travel Rule regulations in their own jurisdictions.

If you have any questions, kindly reach out to our Customer Support team at support@hodlnaut.com, and we will be more than happy to assist you.

For more information, please read: 

https://www.mas.gov.sg/regulation/notices/psn02-aml-cft-notice---digital-payment-token-service

https://www.fatf-gafi.org/media/fatf/documents/recommendations/Updated-Guidance-VA-VASP.pdf

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Disclaimer: By using Hodlnaut, users expressly acknowledge and agree to the Terms of Use listed on our website at www.hodlnaut.com. This includes the relevant risk warnings applicable to you as a user of Hodlnaut's services, prior to/when carrying out Digital Payment Token (DPT) transactions. This article is for informational purposes only, and is not an offer nor a solicitation to invest in DPT, securities, funds, partnership interests or other investments or funding or purchasing loans. It is the user's sole responsibility to conduct due diligence and research extensively into each DPT and platform, and understand that the volatility and unpredictability of the price of DPT may result in significant loss over a short period of time. No information on Hodlnaut should be considered to be business, legal, financial or tax advice regarding the use of Hodlnaut. Users should consult their own legal, financial, tax or other professional advisors before using Hodlnaut. Please refer to our website at https://www.hodlnaut.com/tos for the full Terms of Use.

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