Binance, one of the world’s largest crypto exchanges, announced that it has partnered with Shyft Network, public blockchain protocol, as it prepares to comply with the regulations of the Financial Action Task Force (FATF).
The Shyft Network has been designed to provide a decentralized solution to meet global compliance standards for crypto industry players, including the “travel rule” of the FATF.
Binance’s chief compliance officer, Samuel Lin, said there was no existing infrastructure until the creation of the Shyft Network by which firms could comply with the new FATF rules.
The controversial travel rule requires VASPs to collect and share Know Your Customer (KYC) information during transactions as part of the FATF’s updated guidance for Virtual Asset Service Providers (VASPs) — issued last summer and set to come into effect this June.
A Partnership To Move Industry To Next Level
Shyft’s advisor and former FATF executive secretary, Rick McDonell, said the partnership “should help move this [ … ] industry to the next level when it comes to interfacing effectively with regulators,” adding:
“Other exchanges would be well advised to participate in federations that practically address global compliance requirements, particularly the FATF’s Travel Rule.”
Shyft seeks to encourage crypto businesses to use their identity passporting, database bridging, and data attestation infrastructure to implement an industry-wide solution to the requirements of the FATF.
Its open-source technology — designed to comply with both the FATF guidelines and the GDPR data privacy law of the European Union — aims to maintain the full use of decentralized networks and to establish secure principles of data sharing that apply across multiple jurisdictions.
Shortly after the travel rule had been finalized, FATF Secretariat Tom Neylan said there remained “the work to be done by the private sector to develop a technical system capable of implementing this rule.” He stressed at the time that:
“We didn’t want FATF to sit down and tell technical details of exactly how companies should comply with it because that would quickly become out of date.”