Travel Rule
A compliance rule requiring crypto service providers to share sender and recipient information for certain transfers.
The Travel Rule is an anti-money-laundering requirement that applies to many crypto businesses, such as exchanges, custodians, and other virtual asset service providers. It requires them to collect, verify, and transmit identifying information about the sender and recipient when a qualifying crypto transfer is made. The rule comes from traditional finance, where banks must pass payment details along with wire transfers, and has been adapted by regulators for digital assets.
It matters because regulators use it to help detect illicit finance, sanctions evasion, and fraud, while businesses use it to decide whether they can process a transfer. For example, if a customer sends bitcoin from one regulated exchange to another, the sending exchange may need to share the customer’s name and account details with the receiving exchange before or during the transfer. The rule usually does not change how a blockchain transaction works technically, but it can affect onboarding, withdrawals, deposits, and transfers between regulated platforms.
Other terms in Regulation & Tax
AML
Anti-money laundering rules and processes aim to stop criminals from using financial systems, including crypto platforms, to hide or move illicit funds.
BitLicense
A state license required for many virtual currency businesses that serve customers in New York.
CARF
CARF is an OECD framework for tax reporting and automatic exchange of information about crypto-asset transactions.
Crypto Tax Loss Harvesting
A tax strategy where investors sell crypto at a loss to realize a capital loss that may offset taxable gains, subject to local rules.