Payment giant PayPal joined the Coinbase-led compliance initiative called Travel Rule Universal Solution Technology (TRUST). Launched in 2022, the solution was created to “protect the security and privacy” of its members’ customers while complying with the Travel Rule.
The latter is a U.S. law that requires financial institutions and companies to share certain information about a customer if they are sending money above a threshold. As Coinbase explained when the compliance solution was launched, crypto exchanges and others must adhere to this rule.
PayPal is joining the Amber Group, Anchorage Digital, Binance.US, bitFlyer, BitGo, Bittrex, BlockFi, BlocPal, Circle, Crypto.com, Robinhood, Tetra Trust, Voyager, Kraken, Gemini, Consmart, Netcoins, Nexo, Paxos, and other members that comprised a total of 38.
Crypto exchange Coinbase said the following in this announcement:
PayPal has been a leader in digital payments for more than 20 years by leveraging technology to make financial services and commerce more convenient, affordable, and secure for more than 400 million consumers and merchants around the world (…). The addition of PayPal marks another milestone in TRUST’s journey to become the global, industry-standard solution for Travel Rule compliance.
TRUST provides its members with a suite of tools and features, such as proof of ownership, and “comprehensive compliance” with the Travel Rule. Thus, its members can prevent any issues with U.S. authorities.
According to the official website, members must meet certain security and privacy standards to be included in TRUST. This included meeting anti-money laundering and know-your-customer (KYC) requirements before joining.
Coinbase and the other members announced a partnership with technology compliance company Exiger to “assist in meeting these requirements”. On the solution, its website claims the following:
Information is sent directly from one TRUST member to another, through end-to-end encrypted channels. TRUST never centrally stores sensitive customer information where it could be targeted by an attacker or misused by a third party.
Coinbase Loses Crypto Community’s Trust?
Coinbase’s compliance solutions and partnerships have been in the spotlight for several months. As Bitcoinist reported back in June, there were rumors about an alleged partnership between the exchange platform and the U.S. Immigration and Customs Enforcement (ICE) agency.
According to the rumors, the exchange platforms were selling user data to the government agency. A representative for Coinbase denied the rumors claiming that all data offered to ICE is public.
However, a portion of the crypto community expressed concerns and have been more concerned over the following months as the U.S. and international watchdogs’ crack down harder on the crypto industry. Worldwide governments seem to be pushing for a crypto space where users must transact in complete transparency forfeiting their rights to privacy.