(Bloomberg) — Coinbase Global Inc., Gemini Trust Co. and Robinhood Markets Inc. are among firms helping to build a platform to comply with a U.S. money-laundering rule as crypto and financial-technology companies seek to satisfy existing requirements and head off stricter oversight.
A group of 18 companies is setting up the platform to help meet conditions of the U.S. Treasury Department’s “travel rule,” which requires financial firms to pass on information including customer names, account numbers and transaction dates of fund transfers. The coalition has held talks with U.S. and global regulators about their plan, said Elena Hughes, chief compliance officer of crypto platform Gemini.
“We believe that the solution will allow for top-tier compliance for the travel rule, and we are looking to get buy-in from our regulatory authorities,” Hughes said in an interview.
Crypto-related firms have said that regulations are outdated and existing agencies don’t have the expertise to oversee the sector. Meanwhile, rule makers are pushing for tighter controls. Commodity Futures Trading Commission Chairman Rostin Behnam and Securities and Exchange Commission Chair Gary Gensler have called for more-aggressive oversight.
The group’s initiative, known as Travel Rule Universal Solution Technology, is a separate platform from the blockchains through which cryptocurrencies are transferred. There will be no central store of personal data, and the client information is sent directly from one member to another, the group said in a statement.
While private software makers offer some compliance solutions, the group thinks its proposal is better, Paul Grewal, chief legal officer of Coinbase, said in an interview.
“What makes TRUST unique is it’s the most industrywide solution to the problem,” he said. “It’s an excellent example of the industry actually coming together to solve these problems on its own.”
Treasury’s travel rule has been in place since 1996. In 2020, the department’s Financial Crimes Enforcement Network proposed an amendment extending the rule’s reach to crypto transactions.
Among other firms in the TRUST network are Fidelity Digital Assets, Kraken and Paxos.
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