Design of Blockchain-based Travel Rule Compliance System

TL;DR

This paper presents a blockchain-based system for travel rule compliance that ensures secure, decentralized exchange of personal data for virtual asset transfers, enhancing privacy and security for VASPs.

Contribution

It introduces a novel permissioned blockchain system that enables fully-decentralized, secure, and privacy-preserving travel rule compliance for virtual asset transfers.

Findings

Supports fully-decentralized data exchange

Ensures secure management of travel rule data

Prevents leakage of personal information

Abstract

In accordance with the guidelines of the Financial Action Task Force (FATF), Virtual Asset Service Providers (VASPs) should comply with a `travel rule', which requires them to exchange originator's and beneficiary's personal information when transferring virtual assets. In this paper, we propose a novel blockchain-based travel rule compliance system that supports fully-decentralized data exchange. The proposed system uses a permissioned blockchain, and thereby eliminates the possibility of leakage of personal information to third parties or even to travel rule service providers, and ensures that travel rule data can be managed securely.