UK firms told to comply with cryptoasset transfer rule

crypto travel rule Image credit: Inkoly / Shutterstock

The UK’s financial watchdog has told businesses that next month they must comply with new rules aimed at making cryptoasset transfers more transparent.

From 1 September, any UK cryptoasset business will have to collect, verify and share information on cryptoasset transfers.

The so-called “Travel Rule” aims to align practices across other financial jurisdictions to help detect suspicious crypto transactions.

The Financial Action Task Force, an intergovernmental organisation tackling global money laundering, has called on other jurisdictions to implement the Travel Rule.

Crypto businesses must stay compliant even if making use of third-party suppliers under the new rule.

They must also comply when sending or receiving a cryptoasset from any other jurisdiction that has imposed the rule.

When sending to places that do not have the Travel Rule, crypto firms will be required to gather the necessary information or follow money laundering regulations.

For transactions without the full information, UK crypto companies must conduct a risk-based assessment if the recipient should be allowed the cryptoassets, the Financial Conduct Authority said.

It comes amid a wider regulatory crackdown on the crypo sector. From 8 October, the FCA will enforce a “cooling-off period” for first-time crypto buyers and ban “refer a friend” bonuses in cryptoasset marketing.

Payments giant PayPal this week said it will temporarily stop UK users from buying cryptocurrency to meet new requirements.