Introduction
The global regulatory landscape for cryptocurrencies is evolving, and one significant change is the introduction of the Travel Rule for crypto transactions in Europe. Historically applied to banks, this rule now extends to digital asset transactions starting December 30, 2024. Its goal is to prevent money laundering and other illicit activities by requiring Crypto-Asset Service Providers (CASPs) to share basic information about senders and recipients. Below is a concise explanation of what the Travel Rule is and how it affects your activity at Knaken.
What Is the Travel Rule?
The Travel Rule is a global standard originally set by the Financial Action Task Force (FATF). It obliges crypto service providers to collect and share information on both the sender and the recipient of cryptocurrency transfers above a certain threshold, promoting transparency and helping authorities to combat financial crime. Although it’s been part of banking for a long time, it will soon impact crypto transactions in Europe under the Markets in Crypto-Assets Regulation (MiCAR) and broader AML/CFT guidelines.
Hosted vs. Unhosted Wallets
• Hosted Wallet:
A hosted wallet is managed by a third-party provider, such as Knaken itself. You do not hold your own private keys, which simplifies usage but entrusts security to the service provider.
• Unhosted Wallet:
Also known as non-custodial or self-hosted, these wallets let you manage your own private keys (e.g., Ledger, MetaMask, Exodus). They offer more control but also place additional responsibility on the user.
How the Travel Rule Affects You at Knaken
Although the Travel Rule adds some new steps, it does not hinder your day-to-day trading on Knaken. It mainly applies when transferring assets in or out of your account. Here are the main scenarios:
1. Withdrawals to an unhosted wallet
• Ownership Verification: If you withdraw crypto to your personal non-custodial wallet, Knaken needs to verify that the wallet truly belongs to you.
• One-Time Check: After verifying a specific wallet, you usually won’t need to re-verify the same wallet.
2. Withdrawals to a hosted (custodial) wallet
• Your own account on another platform: You indicate which exchange or broker it belongs to.
• Another person’s custodial wallet: You may be asked for the recipient’s details if it’s not for your own account.
3. Deposits from an unhosted wallet
• Already verified wallet: If this wallet is already verified at Knaken, your deposit proceeds as normal.
• New wallet: If not verified, a simple process confirms that the wallet is yours.
4. Deposits from a hosted wallet
• Recognition: If not automatically recognized, you may need to confirm the wallet’s details and the sender’s identity.
Privacy and Data Protection
Knaken is committed to adhering to the Travel Rule while safeguarding your information. We employ strict security and privacy protocols, limiting data collection to what is necessary under relevant regulations.
Have Questions?
For more information about how the Travel Rule might affect your withdrawals or deposits, feel free to contact our support team at [email protected]. We are here to help ensure that your crypto transactions remain smooth and compliant with upcoming regulations.
Knaken Cryptohandel B.V. is registered with De Nederlandsche Bank N.V. (DNB) as a provider of crypto services. DNB supervises Knaken Cryptohandel B.V.'s compliance with the Money Laundering and Terrorist Financing (Prevention) Act and the Sanctions Act 1977. Knaken Cryptohandel B.V. is not subject to prudential supervision by DNB or conduct supervision by the AFM. This means that there is no supervision of financial requirements or business risks and there is no specific financial consumer protection.
Investing in crypto-related products involves significant risks.
