Travel Rule/TFR: what you need to know about new crypto-currency regulations
- What changes with TFR?
- What information is shared?
- When does it start?
- Key facts: Closer collaboration between states and CASP
The Travel Rule and its integration into the TFR (Transfer of Funds Regulation) are now a reality in Europe. Since December 30, 2024, players in the crypto sector have had to comply with these new rules. But what exactly are they, and how do they impact users and service providers? Here’s everything you need to know.
What is the Travel Rule?
The Travel Rule is a recommendation issued in 2019 by the FATF (Financial Action Task Force), an international organization created to combat money laundering and the financing of terrorism.
The objectives of the Travel Rule :
- Collect information on the senders and recipients of crypto transactions.
- Share this information with other parties involved in the transfer (such as financial service providers).
Originally, the Travel Rule was only a recommendation. It was not binding… unless it was incorporated into national or international regulations. And this is precisely what the European Union has done.
European Union strengthens Travel Rule with TFR
The EU has taken over the Travel Rule, strengthened it and incorporated it into the TFR (Transfer of Funds Regulation). This regulation is now legally binding in all EU member states.
Key points of the TFR :
- Adoption : The TFR regulation was adopted in June 2023.
- Direct application : As it is a European regulation, it applies directly in all member countries (France, Belgium, Spain, etc.) without the need for additional national laws.
What changes with TFR?
The TFR introduces several major changes for players in the crypto sector:
1. No minimum threshold
This applies to all transactions, no matter how small. This means that every crypto transfer, whatever the amount, must be traced and documented.
2. Self-hosted portfolios
Specific obligations apply to transactions involving self-hosted portfolios (not managed by a third party). These portfolios, often considered more difficult to regulate, are now subject to strict rules.
3. Information gathering and sharing
CASPs (Crypto Asset Service Providers) must now :
- Collect detailed information on transaction senders and recipients.
- Share this information with other parties involved in the transfer.
What information is shared?
Here is a summary of the information collected and shared according to the TFR:
| Information type | Expeditor | Recipient | Who receives this information? |
|---|---|---|---|
| Identity | – Fullname | – Fullname | – The service provider involved in the transaction (PSAN, VASP, bank). |
| Address or unique identifier | – Address (or unique identifier, e.g. account number or crypto wallet address). | – Address (or unique identifier, e.g. account number or crypto wallet address). | – Stored internally for transactions involving self-hosted portfolios. |
| Account/portfolio number | – Account number or public address of the portfolio used for the transaction. | – Public address of the recipient’s portfolio. | – Shared with the entities involved to ensure transaction traceability. |
| Official identity document | – Official identity document (if applicable, depending on local rules or transaction specifics). | – Generally not required in most cases. | – Kept for possible requests from regulators or competent authorities. |
When does it start?
It’s official as of December 30, 2024!
From this date, CASPs must :
- Collect and share detailed information on all crypto transactions (even the smallest).
- Follow guidelines to ensure compliance.
Please note: Although the TFR does not require this information to be communicated to the tax authorities, we know that this will become mandatory with the arrival of DAC8…
The Travel Rule and the TFR Regulation mark a milestone in the regulation of cryptocurrencies in Europe. These new rules aim to strengthen transparency and traceability of transactions, while combating money laundering and the financing of terrorism.
For users and service providers, this means a necessary adaptation, but also an opportunity to strengthen trust in the crypto ecosystem.
Key facts: Closer collaboration between states and CASP
The TFR marks a milestone in the collaboration between governments and CASPs (Crypto Asset Service Providers). The traceability of information between these players is being strengthened, meaning that crypto transactions are now more transparent and better regulated.
For users, this underlines the importance of :
- Keeping track of your crypto wallet : With tools like Waltio, you can centralize and track all your transactions in real time.
- Correctly declare your crypto taxes : Increased transparency means that tax authorities will find it easier to verify crypto declarations.
Ready to get started with Waltio? Sign up now to track your investments make your cryptocurrency declaration easier.