AnChain.AI, a blockchain security company that specializes in AI-powered platforms and GlobaliD, the industry-leading self-sovereign identity provider, unveiled a new technical framework that carves out a path toward regulatory compliance for service providers interacting with non-custodial wallets. The framework tackles Travel Rule compliance for non-custodial offerings including decentralized finance or DeFi.
Called PRIVATE (for Privacy Preservation through Resolution of Identity via Verification and Attestation for Travel Rule CompliancE), the framework addresses the Financial Action Task Force’s (FATF) updated recommendations released on October 28, 2021, which encompassed DeFi, NFTs, stablecoins, and wire transfers. In particular, recommendation 179c updated guidance on non-custodial wallets.
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According to FATF’s recommendations, Virtual Asset Service Providers (VASPs) are required to collect customer information for virtual asset transfers and enforce anti-money laundering (AML) rules like sanction screening and transaction monitoring.
Several frameworks have been proposed to enable VASPs to exchange relevant information for custodial offerings—including the recently announced TRUST platform from Coinbase, Fidelity, and other industry players—that require bilateral data transfers. The PRIVATE framework complements these potential solutions by incorporating non-custodial wallets, providing a holistic approach to web3 compliance.
In PRIVATE, AnChain.AI and GlobaliD have developed a privacy preserving technical framework that allows VASPs to verify customer authorization without revealing a wallet owner’s underlying data, providing the first pathway toward Travel Rule compliance for non-custodial offerings.
AnChain.AI and GlobaliD have now begun development of an end-to-end solution leveraging the PRIVATE framework that VASPs like financial institutions and cryptocurrency exchanges will be able to employ for Travel Rule compliance.
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“AnChain has brought security and compliance solutions to the blockchain industry for years,” Francesco Piccoli, Director of Product at Anchain.AI, said. “Some of the new recommendations from FATF introduce new complex challenges for companies in the web3 space. We’re proud to partner with GlobaliD to present a technical framework addressing those challenges and bring new solutions to market together.”
“GlobaliD believes that the future of digital identity for web3 will allow privacy for consumers while enabling compliant financial services, making the ecosystem efficient and safe for all parties involved,” said Vadim Slavin, GlobaliD Director of Credentials Platform. “PRIVATE brings this future one step closer. Privacy and regulatory compliance no longer have to be two contradictory terms.”
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