Shyft Network launches the Veriscope Governance Task Force in collaboration with some of the industry’s largest global liquidity providers
Veriscope is a blockchain-based compliance framework and smart contract platform for Virtual Asset Service Providers (VASPs). When VASPs onboard, they create a public-private key that represents them (A Shyft address). When users are onboarded, they also create an independent Shyft Address. When users become clients of a particular VASP, it will run its standard KYC procedures as per local regulation.
Today, Shyft Network’s advisors Rick McDonell and Josee Nadeau, in collaboration with global digital token businesses including Bitfinex, Tether, Huobi, HashKey Pro, Tokocrypto, Unocoin, Paycase Financial, and CoinHako, will join existing partners in the creation of the Veriscope Governance Task Force and the onboarding framework for Veriscope, a decentralized compliance framework and smart-contract platform for Virtual Asset Service Providers (VASPs).
In June 2019, the FATF issued guidance requiring VASPs to share Know-your-customer (KYC) data between a transacting Originator and Beneficiary “immediately” – that is, simultaneously or concurrent with the transfer itself. Specifically, the guidance stated VASPs should ensure that:
“…originating VASPs obtain and hold required and accurate originator information and required beneficiary information on virtual asset transfers, submit this information to beneficiary VASP or the financial institution (if any) immediately and securely” .
Veriscope is a decentralized solution for global compliance standards, including the FATF’s Travel Rule guidance. The Governance Task Force is exploring solutions specific to the governance framework and rules around the types of information that VASPs need to provide with respect to onboarding with Veriscope in order to become recognized and discoverable participants.
Joseph Weinberg, Co-Founder of Shyft Network, said “In a time where we are seeing global coordination challenges and incoming guidance requirements that make significant alterations to our ecosystem, it is critical that the rest of the world has strong liquidity representation and directives from our largest operators who in turn aggregate network effects for the smaller VASPs in our space. It is our responsibility to ensure we have a better voice to help direct policy and ensure we can maintain decentralization and user privacy while helping regulators gain comfort in how our ecosystem operates. This group will act as a collective to make decisions, run implementations, address interoperability challenges, and give insights into how we may be able to build regulatory requirements that reduce risk, rather than having guidance that doesn’t effectively solve regulatory challenges.”
The Veriscope team, along with contributing digital token businesses, advisors, and individual contributors, will develop policies in respect of initial rules of engagement, coalition-building, onboarding and data discoverability that address potential coordination and interoperability on behalf of the global digital asset system. These contributors will act as the first set of data custodians on the Shyft Network and will be globally focused on collaborating to ensure future incoming guidance requirements are addressed while being a response team to policymakers and global solution providers who are working to implement travel rule systems globally.
The Task Force will be chaired by Rick McDonell (former Executive Secretary of the FATF) and Josee Nadeau (former Head of the Canadian delegation to the FATF), and will equally include representation from the largest global liquidity venues as well as smaller VASPs in a multitude of jurisdictions. Bitfinex’s Chief Compliance Officer, Peter Warrack, is among the 10 other initial team members that will make up the Governance Team.
“While VASPs will each need to implement a number of solutions to the travel rule dependent upon with whom the VASP is transacting, Veriscope offers an exciting, timely, and available solution that may be attractive to large and small liquidity providers”, said Peter Warrack.
“The word “governance” often implies bureaucracy. Collaborative governance is not. This is what the Veriscope Governance Task Force is about. It provides common rules for trustworthy and reliable transactions that can meet the FATF requirements” , said McDonell.
Regarding his involvement in the Task Force, Tether’s Chief Compliance Officer, Leonardo Real, said: “I look forward to collaborating with other industry professionals to discuss how decentralized governance models like Verisope might be used to create trust networks that allow participants to securely interact by relying on technology and not just legal agreements.”
The development of the Governance Framework represents an important milestone in the development of Veriscope, which enables VASPs to, among other functions, form and manage semi-trusted coalitions, pre-validate accounts, information, and compliance policies, and ultimately, whitelist other VASPs on a public registry.
“Any VASP system has to allow for any and all types of entities to have access, and with this, we have built out the world’s first self-governing model for VASP participants. This model allows global counterparties to onboard into the network, and maintain full sovereignty over their business requirements and compliance obligations,” said Chris Forrester, CTO, and Co-Founder of Shyft Network, adding that “we don’t believe anyone can be precluded from accessibility, but rather the network participants should be given the tools to allow them to choose who they do business with. This formal governance policy eliminates Core developers from being able to dictate who is “good” and “bad” and leaves those decisions up to VASP’s globally, while also providing a baseline for how counterparties are expected to share information with counterparties. This is only the first iteration of what will be a global policy for coordination.”