Although BitFlyer has restricted exchange-to-exchange transfers, users can still send and receive cryptocurrency to and from self-custody wallets like MetaMask.
The Financial Action Task Force’s (FATF) Anti-Money Laundering (AML) laws, generally referred to as the Travel Rule, will soon be put into effect, thus cryptocurrency exchanges in Japan are putting the finishing touches on their preparations.
The adoption of procedures to adhere to the more stringent AML regulations governing cryptocurrency transactions in Japan was disclosed by bitFlyer, a significant Japanese cryptocurrency exchange, on May 30th.
In order to track bitcoin transactions and stop money laundering and other financial crimes, the Travel Rule was created to assist law enforcement agencies. The rule, according to some critics, may hinder innovation in the bitcoin sector. Despite these reservations, BitFlyer has stated that adhering to the Travel Rule is a priority for the company. The business claims that the new deposit caps would protect its customers and guarantee competent regulation of the cryptocurrency market.
Restrictions on deposits and transfers have been put in place by bitFlyer, which makes it impossible for transactions to and from exchanges that are not a part of the Travel Rule Universal Solution Technology (TRUST) network.
The Trust network is a platform that enables exchanges to securely store client data in conformity with the Travel Rule’s regulatory obligations. It is used by industry leaders including Coinbase and Crypto.com. By implementing this solution, bitFlyer demonstrates its dedication to following AML requirements in the Japanese cryptocurrency industry.
According to the announcement, Coincheck is the only Japanese exchange part of the TRUST network and can interact with bitFlyer.
What does this mean for users?
For users of BitFlyer, the new deposit limits will mean that they will be able to deposit less cryptocurrency per day. This could be a inconvenience for some users, but it is important to remember that the Travel Rule is designed to protect users and prevent financial crime.
What does this mean for the cryptocurrency industry?
The adoption of crypto deposit limits by BitFlyer and other cryptocurrency exchanges is a sign that the industry is maturing and becoming more regulated. This could make it more difficult for criminals to use cryptocurrency to launder money and commit other financial crimes. However, it could also stifle innovation in the industry.
Only time will tell what the long-term impact of the Travel Rule will be on the cryptocurrency industry. However, it is clear that the rule is having a significant impact on the way that cryptocurrency exchanges operate.