Wallet Attestations for Virtual Asset Service Providers and Crypto-Assets Insurance

TL;DR

This paper explores how wallet attestations can help virtual asset service providers comply with the Travel Rule and assist insurers in assessing risks related to cryptographic key management in crypto-wallets.

Contribution

It introduces the application of attestation technologies to wallet systems for improved compliance and risk assessment in the virtual assets industry.

Findings

Wallet attestations can verify cryptographic key states.

Attestations provide evidence for regulatory compliance.

Insurers can use attestations for risk evaluation.

Abstract

The emerging virtual asset service providers (VASP) industry currently faces a number of challenges related to the Travel Rule, notably pertaining to customer personal information, account number and cryptographic key information. VASPs will be handling virtual assets of different forms, where each may be bound to different private-public key pairs on the blockchain. As such, VASPs also face the additional problem of the management of its own keys and the management of customer keys that may reside in a customer wallet. The use of attestation technologies as applied to wallet systems may provide VASPs with suitable evidence relevant to the Travel Rule regarding cryptographic key information and their operational state. Additionally, wallet attestations may provide crypto-asset insurers with strong evidence regarding the key management aspects of a wallet device, thereby providing the insurance industry with measurable levels of assurance that can become the basis for insurers to perform risk assessment on crypto-assets bound to keys in wallets, both enterprise-grade wallets and consumer-grade wallets.