Binance, the largest exchange for invest in cryptocurrencies around the world, has chosen Shyft Network to solve a looming regulatory requirement that companies must share users' personal data when managing digital asset transactions.
The Travel Rule
The Barbados-based Shyft Network is one of several potential solutions to the Financial Task Force's (FATF) Travel Rule. The name of this rule derives from the fact that the identification data of who carries out a transaction must travel with the transaction itself.
"Shyft stands out because its developers are extremely keen and well connected to global regulators," said Samuel Lim, Binance's compliance officer. Getting public approval of Binance is a big deal for the Shyft Network, a SWIFT-like infrastructure that incorporates Ethereum technology.
The company hired former FATF executive secretary Rick McDonell as an adviser last October. "We've worked with many of the big exchanges for the past nine months," said Shyft Network co-founder Joseph Weinberg.
"Binance is the first to emerge publicly, but surely more will come." The FATF, an international money laundering supervisory body that sets the rules for the G-20 countries, will review progress made in tackling the travel rule for virtual asset service providers (VASPs) in June. this year.
There are a number of variables when meeting travel requirements, including creating an identity system in a VASP universe, storing and sharing personally identifiable information (PII) without compromising privacy and agreement. on standardized messages or data transmission system.
Interoperability above all
Regardless of the solutions adopted in the sector, interoperability between them is essential. "If a European solution doesn't fit an Asian solution, then both are wrong," said Lim.
“Perhaps, at this early stage, the networks are trying to differentiate themselves and perhaps there is a sort of competitive factor or competitive advantage. But going forward in time, when they get old enough, they won't have much choice but to collaborate to meet the information transfer and forwarding requirements, "he said.
The Shyft network comprises three levels, explained Weinberg. The base network is a blockchain built from a modified version of the base Ethereum code. A second tier is an infrastructure based on smart contracts that determines how counterparties are identified and the rules on how they share data. The highest level is where the actual data transmission takes place.
Some believe that a decentralized blockchain-based approach is needed to solve the problem of travel rules, while others would prefer to rely on more centralized systems.
Lim di Binance is decidedly agnostic about the choice of technology. “We are not worried if it will work on ERC-20, Ripple or Binance Chain. It really doesn't matter. We need a cat to catch mice. This is the solution for us, "he said.