12.11.2020

Dukascopy Bank meets 'Travel Rule' requirements for virtual assets

We are delighted to announce that Dukascopy Bank has signed a partnership with Taiwan-based blockchain security firm CoolBitX Ltd. to participate in the development and implementation of Sygna Bridge. A simple and secure portal for compliant data sharing, Sygna Bridge allows "Virtual Asset Service Providers" (VASPs) to comply with the Financial Action Task Force (FATF) "travel rule".

This rule requires that "Virtual Asset Service Providers" ("VASPs") initiators involved in a VA transfer obtain and hold the required information about the originator and beneficiary (e.g., name, account number, etc.) and submit this information to the beneficiary VASPs "securely" and "immediately". The purpose of the rule is to trace the flow and identify the originator and the beneficiary in the event of possible cases of money laundering or terrorist financing ("ML/FT") in the context of a VA transfer. The rule also provides that the sharing of information on the originator and beneficiary must not be directly attached to the transfer itself.

The development of financial activities involving VA and VASP are now the subject of increased attention from regulators, and Dukascopy Bank makes decisive efforts to comply with this obligation in view of the expansion of our crypto projects. 

CoolBitX's Sygna Bridge is a member of the Joint Working Group (JWG), an international blockchain industry coalition that develops and promotes the unifying VA messaging standards – InterVASP Messaging Standards (IVMS101) for the purpose of Travel Rule compliance. IVMS 101 is the first successful crypto industry-wide effort to unify Travel Rule compliance services and make them cross-compatible. In addition, Sygna Bridge recognizes how critical messaging interoperability is to successfully combat money laundering. As a result, Sygna Bridge is diligently working toward compatibility among technical solutions and is dedicated to collaboration between industry players. As of today, the Sygna Alliance comprises more than 20 VASPs from around the globe. 

The Sygna Bridge's solution provides a communication mechanism for the participants to share the required information between the originator and the beneficiary in a secure and immediate manner based on an Application Program Interface ("API"). Information about the originator and beneficiary is entered by the sender into the transaction user interface and the Sygna Bridge platform encrypts and transmits the information to the beneficiary VASP. This function allows the originator and beneficiary VASPs to exchange the information required during a VA transfer simultaneously with the VA transfer itself. In addition, the Sygna Bridge uses cryptographic protocols such as the Elliptic Curve Integrated Encryption System ("ECIES") and the Elliptic Curve Digital Signature Algorithm ("ECDSA") to ensure the security and protection of shared information. 

We believe that the Bank's participation in this project will help meet current and future legal and regulatory requirements while providing the necessary impetus for the successful development of services involving virtual assets. In addition, the Bank has not ceased to maintain a constant assessment and vigilance over other projects and potential solutions implemented by other players in order to optimize and select the best solution to its interests.