Crypto.com freezes XRP deposit due to new law

Edward Farina, a crypto asset trader, denounced how Crypto.com applied the travel rule (travel rule) to your XRP deposit on the exchange before the law came into effect in the European Union. The travel rule, whose name is Regulation (EU) 2023/1113, seeks to provide additional information about those involved in a “travel” transaction along with the transfer of funds with cryptocurrencies and digital money. This is part of the MiCA Law, a set of rules that will determine the operation of cryptocurrency exchanges starting in 2025.

I returned to my home country and sent 12 $XRP as proof. Even though the “travel rule” doesn’t go into effect until December 30, crypto.com refused to credit my funds automatically. It’s December 27th and I won’t be traveling, so why is crypto.com already violating my rights?

Edward Farina, a crypto asset trader

According to Farina, the travel rule is being forced prematurely, which for him constitutes a violation of his rights. In addition, it would be “incorrectly applied” since the transaction was made from your country of origin, not while traveling. Nevertheless, the application of the travel rule It does not depend on the country where you are. It applies in the entire European Union and in other jurisdictions that have adopted the recommendations of the Financial Action Task Force (FATF).

The application of this travel rule has been common, for example, in the United Kingdom, as reported by NoticiasVE. Also in Canada. This compliance obligation is not new, even though it will come into force on the penultimate day of December throughout the European Union: it has been applied irregularly by some countries in the world.

Some users do not show any discomfort with the data interception measure, and assure that deposits are only a little slower than before. Others remember that the control of private information by States, centralized institutions and governments represents a vulnerability for individuals, and recommend self-custody.

What is the travel rule?

The “travel rule” refers to the “journey” of the information, not of the user, in accordance with the principle that in each financial institution through which it passes, Such attached information of the emissary and the beneficiary of the funds must be recorded. In this way, institutions that “ensure” compliance with financial and anti-money laundering laws in the EU can request data about a digital economic transaction. and intercept funds considered illicit at any point in time.

In summary and according to the Official Journal of the European Union, the travel rulewhich already applied to current transactions and will begin to apply to crypto assets as of December 30, will impose “the obligation of payment service providers to accompany fund transfers with information about the payer and the beneficiary in a uniform manner” to throughout the EU. The travel rule widespread comes with the entry into force of the second phase of the so-called MiCA Law, which NoticiasVE has reported exhaustively.

According to Notabene, a company that offers compliance advisory services, the requirements requested from financial platforms, such as exchanges, for users in the European Union are as follows: name of the emissary, account number, physical address, national identity number, customer identification number or date and place of birth. The information collected from the beneficiary is smaller. According to the same company, “the usual reporting transaction threshold is $1,000, although in the United States it is $3,000.”

The identity information collected about users must be transmitted to the financial institution receiving the funds, which may be another exchange or a bank, along with the transfer of funds. In addition, financial institutions must maintain records of information for at least five years, and constantly report suspicious transactions to regulators.