AMINA Bank: How the Travel Rule is Catalysing Institutional Crypto Adoption

The Travel Rule, originally established by the U.S. Bank Secrecy Act to combat money laundering and terrorist financing, has shifted from a regulatory burden into competitive infrastructure within the crypto industry. Globally enforced by the Financial Action Task Force (FATF), jurisdictions worldwide require Virtual Asset Service Providers (VASPs) to share transaction data. Institutional-grade compliance is becoming the gateway to deep institutional capital, banking partnerships, and scalable and sustainable digital asset operations.

In recent years, the crypto market has become increasingly bifurcated: regulated venues with Travel Rule infrastructure in place gain institutional access while non-compliant players face capital flight and continued banking exclusion. For operators in the crypto markets, abiding by the Travel Rule unlocks - rather than restricts - opportunity.

Regulatory Certainty Unlocks Institutional Capital

From an institutional point of view, the Travel Rule delivers a few tangible benefits:

Regulatory certainty and reputational cover: When VASPs and financial institutions can show that their crypto flows are subject to standards comparable to wire transfers, it is easier to justify digital-asset activity to boards, regulators and auditors. That reduces career risk for decision-makers and unlocks more balance-sheet and product capacity for the asset class.

Better risk management: Having consistent originator and beneficiary information allows institutions to plug crypto flows into existing transaction monitoring, sanctions screening and customer-risk models. That makes it easier to spot suspicious activity, manage exposure to high-risk counterparties and respond quickly to law-enforcement requests.

Interoperability with banking rails: Banks are more willing to provide accounts, settlement services and fiat on/off-ramps to VASPs that can meet Travel Rule obligations. This improves liquidity, reduces reliance on shadow banking structures and makes it more realistic to run institutional products (ETPs, funds, structured products) that rely on clean and auditable crypto legs.

Foundation for long-term adoption: For crypto to move from a speculative niche into core financial infrastructure, it has to be compatible with how the rest of finance works. Travel Rule compliance does not remove the properties that make crypto useful (24/7 settlement, programmable assets, self-custody). At the same time, it ensures that whenever regulated intermediaries are involved, there is a clear audit trail. That is a baseline requirement for pension funds, insurers, corporates and sovereigns to participate at scale.

Yes, there are trade-offs. For example, smaller, privacy-focused users may dislike any mandatory data-sharing and implementation can be messy in the short term as standards and vendors compete. But from a macro perspective, the Travel Rule is one of the compromises that lets crypto grow up. It raises the floor on compliance and makes it much harder for bad actors to hide inside regulated venues, while giving serious institutions the confidence they need to treat crypto as part of their normal risk-managed toolkit.

The Compliance Gap: Why Illicit Flows Persist

Crypto markets have repeatedly seen illicit activity alongside legitimate innovation. Early ecosystems saw everything from dark web market payments and ransomware to outright fraud, rug pulls and large-scale hacks moving pseudonymously across public blockchains. While blockchain analysis can trace flows at the address level, law enforcement and compliance teams often lack a reliable link between those addresses and real-world identities.

This gap is exactly what criminals exploit using exchanges, OTC brokers and other intermediaries to move value between fiat and crypto without sufficient transparency on who is ultimately sending or receiving funds. The Travel Rule is designed to address this flaw by forcing regulated intermediaries to attach basic identity data to transfers, aligning crypto with long-standing standards in traditional finance and reducing the scope for abuse without banning self-custody or peer-to-peer use.

The Crypto Travel Rule

The crypto Travel Rule is an anti-money laundering (AML) requirement that forces Virtual Asset Service Providers (VASPs) such as exchanges and custodians to collect and share basic identifying information about the sender and receiver of a crypto transfer. It comes from the Financial Action Task Force’s (FATF) Recommendation 16, which applies the same data-sharing standards used in traditional bank transfers to digital assets. The idea is to make sure key details (about who is moving funds) travel with the transaction. This creates an audit trail so that regulators and law-enforcement can trace flows when needed.

Since the FATF formalised this guidance for digital assets in 2019, regulators across the world have been building their own Travel Rule frameworks for VASPs. The following sections outline how major jurisdictions like APAC and the EU have implemented and aligned with these standards.

Jurisdictional Implementation: Global AML/CFT Standards Converge APAC: Hong Kong and Singapore Set the Regional Benchmark Hong Kong and Singapore are prominent crypto hubs in APAC. Both attract institutional trading, custody, tokenisation and exchange activity at scale. Because of this, each has built clear Travel Rule frameworks that set the tone for regulatory expectations across the region.

Hong Kong

Hong Kong built its Travel Rule as part of its shift toward a regulated, institution-ready crypto market. An AML amendment, which passed in late 2022 created a full VASP licensing framework, and from June 2023, Travel Rule compliance became mandatory for all licensed exchanges.

Under HK’s Securities and Futures Commission (SFC) rules, every digital asset transfer must include basic originator and beneficiary information. Hong Kong uses an HKD 8,000 threshold for full customer details. Above this amount, the sender’s name, identification data and account number must be shared (along with the same details of the beneficiary). Hong Kong applies the same requirement to both domestic and cross-border transfers, and the information must be transmitted before or at the same time as the transfer.

Hong Kong also directly tackles self-custodied wallets. Exchanges must record the owner’s information and verify that the customer actually controls the wallet. This is often done through a signed message. On the counterparty side, VASPs are required to check the regulatory status and AML controls of any other VASP they transact with.

Singapore

Singapore was an early adopter of the Travel Rule. The Monetary Authority of Singapore (MAS) issued Notice PSN02 in April 2019. This was a regulation for digital payment token (DPT) service providers that requires them to implement measures to prevent money laundering and the financing of terrorism. The law’s obligations fully came into effect in early 2020. This made Travel Rule compliance a standard requirement for all Digital Payment Token service providers in the country.

Singapore’s rules require VASPs to collect and transmit sender and recipient information for every crypto transfer, regardless of size. A threshold of SGD 1,500 determines when more detailed personal information (such as address or ID number) must also accompany the transaction. This mirrors the FATF’s $1,000 benchmark and ensures that both low-value and high-value transfers carry appropriate levels of information. Regarding self-custodial wallets, Singapore’s MAS does not require Travel Rule transmission. However, the MAS expects firms to treat transfers involving self-custodial wallets as higher risk and apply additional monitoring.

The regime places full responsibility for FATF-aligned compliance on VASPs but does not impose extra counterparty-VASP checks beyond standard AML expectations. Overall, Singapore’s early implementation gives institutions confidence that crypto transfers are monitored with the same discipline expected in traditional financial channels.

The European Union: Zero-Threshold Transparency

The European Union has built one of the most unified and comprehensive Travel Rule regimes anywhere. In 2023, the EU updated its fund transfer rules to fully include crypto-assets and the framework came into force in December 2024. One of the defining features of the EU approach is its zero-threshold rule. Every crypto transfer, no matter how small, must carry full originator and beneficiary information. This goes further than FATF’s baseline and reflects the EU’s view that even low-value transactions can pose AML/CFT risks.

For Crypto Asset Service Providers (CASPs), this means sender and recipient names, account (or wallet) identifiers and additional details like addresses or national ID numbers must be transmitted with the transfer. The same rule applies across all member states, giving the EU a single, harmonised standard for tracing crypto flows.

The EU also adds proportional safeguards for self-custodied wallets. If a transfer to or from a private wallet exceeds EUR 1,000, the CASP must verify who owns the wallet. Smaller transfers still require basic Travel Rule data but do not trigger the same verification requirements. CASPs must also assess risk when dealing with VASPs outside the EU that do not follow equivalent Travel Rule obligations.

Alongside MiCA and updated AML directives, the Travel Rule forms part of a broader regulatory framwork designed to bring crypto closer to traditional financial norms. The result is consistency. A crypto transfer within the EU is treated much like a bank transfer in terms of information requirements, offering institutions a predictable and transparent compliance environment.

Switzerland, GCC, and Global Harmonisation

Across APAC and Europe, regulators are moving in the same direction. They are applying the "same risk, same rules" principle by aligning crypto transfers with FATF’s Travel Rule. Hong Kong and Singapore have built Travel Rule obligations directly into their VASP licensing regimes, while the EU has created a unified, zero-threshold standard across all member states. Other major crypto hubs aren’t far off either. For example, Switzerland and leading Gulf Cooperation Council (GCC) jurisdictions such as the UAE and Bahrain are also converging on this model, even if their mechanisms differ.

Switzerland remains the strictest adopter. FINMA requires Travel Rule data for all virtual asset transfers with minimum threshold and enforces ownership verification for self-custodied wallets. This goes beyond FATF’s minimum requirements but gives institutions strong assurance that Swiss intermediaries operate with high transparency.

The GCC is more varied but steadily aligning. Bahrain requires Travel Rule-style data sharing for all licensed crypto firms. The UAE applies a layered approach wherein federal AML rules use an AED 3,500 threshold, while ADGM’s regime has effectively no threshold and VARA mirrors the federal benchmark. All expect VASPs to identify senders and recipients and apply counterparty checks.

Despite differences in thresholds and wallet treatment, these jurisdictions share common ground wherein VASPs must collect and transmit originator and beneficiary data. Self-custodied wallets are no longer ignored and cross-border VASP-to-VASP transfers are increasingly supported through interoperable standards such as IVMS 101 and emerging Travel Rule messaging networks. The overall effect is a gradually harmonised global framework aimed at ensuring that crypto intermediaries are held to the same AML standards as traditional financial institutions.

Catalysing Institutional Adoption

From a distance, the Travel Rule can look like pure friction. It brings more data fields to capture, new systems to integrate and more edge cases to handle. However, for regulated participants, it is one of the key pieces that makes crypto usable at scale in a mainstream financial stack.

According to FATF's 2025 targeted update, 73% of jurisdictions (85 of 117) have now passed legislation implementing the Travel Rule, up from 69% in 2024. An additional 14 jurisdictions are currently working on implementation. The focus is shifting from initial adoption to enforcement and supervisory effectiveness. Regulator and industry stakeholders continue to address implementation challenges and emerging risks including DeFi platforms, unhosted wallets, stablecoins, and new scam tactics involving AI-driven schemes. As these areas mature, regulatory frameworks will evolve to address gaps while maintaining the core principle that regulated intermediaries must maintain audit trails comparable to traditional finance.

For institutional participants, these developments signal that Travel Rule infrastructure is becoming permanent financial plumbing-not a temporary compliance exercise. Early adopters with robust implementation gain competitive advantage as the regulatory floor rises globally.

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