Implementation of the New FATF Travel Rule Requirements

Exchanges Face Compliance Challenges

It has become clear that a lot of exchanges are currently having a difficult time due to cryptocurrency regulations in 2025. As a result, certain member country exchanges have already delisted certain coins for non-compliance.

As the new rules start to take shape, FinCEN has also demonstrated that it is becoming a more powerful force and is subtly urging Americans to comply with the new restrictions. The Q3 2019 Anti-Money Laundering (AML) study from CipherTrace, which revealed that the United States alone now unintentionally handles about $2 billion in cryptocurrency transactions annually, was one factor contributing to this.

Therefore, there are already significant ramifications for money laundering in the American banking system. The solutions currently being offered are what are known as augmented layers, or, to put it simply, "plug-in" solutions, because the blockchain cannot be altered on its own without extensive re-engineering.

For these solutions to work, all parties involved must agree on mutual implementation. TransactID, created by NetKi, is one potential solution that is presently in development. This digital currency identification system has been in use since 2016, but it has recently undergone improvements to better incorporate the personally identifiable information required in transactions to support adherence to the new FATF regulations on crypto.

How Does TransactID Work

Going forward, the TransactID service will never be a part of the blockchain itself; instead, each wallet will have its trusted connection.

Theoretically, it operates as follows: Following an initial transfer request (made using an external URL rather than a wallet address), the recipient VASP uses the TransactID protocol to confirm that the PII data is accurate and saved on the original exchange.

This is accomplished by sending a digital certificate for the wallet that started the transfer as well as a certificate for the VASP that started it. PII data is never stored by TransactID itself; instead, it verifies that the VASPs have accurate and acceptable data.

The Future Of Regulations

At this point, there is undoubtedly a lot to handle, but the competition between coins and exchanges to make this work while preserving the integrity of digital assets and the blockchain itself is now genuine.

With transactions becoming less anonymous as a result of these new safeguards, it will soon be clear whether the wild-west age in which cryptocurrency appears to be now relishing will end.