Trezor hardware wallet will be adopting an automated way to share proof of ownership of a cryptocurrency wallet. This rule will apply when a user transacts with a cryptocurrency exchange regulated in Switzerland.
Trezor will be implementing the Address Ownership Proof Protocol (AOPP). This protocol was designed to allow compliance with the anti-money laundering requirements developed by the Swiss Financial Market Supervisory Authority (FINMA).
Trezor complying with Swiss regulations
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The crypto regulatory framework in Switzerland requires the verification of private wallets transacting with virtual asset service providers (VASPs) operating in the country. This is an extension of the recommendations provided by the Financial Action Task Force (FATF).
Switzerland is not the only country advocating for verification in crypto transactions, as Singapore has a similar crypto regulatory framework. The two countries require identification in transactions exceeding $1000.
To determine the ownership of private wallets, VASPs in Switzerland require users to send a screenshot of their wallets. The exchange can also conduct a “Satoshi Test”, where a given number of coins is set to a verified wallet.
A user can also manually sign into their wallet using a private key. However, through AOPP, the manual signing process is automated and made easier.
Marek Palatunis, the CEO of SatoshiLabs, the firm behind the Trezor hardware wallet, noted that the benefits of AOPP such as simplicity and speed would allow users to have a safe way to withdraw their coins.
The travel rule will have a notable effect on the crypto framework in Switzerland. Around 95% of transactions done through Swiss VASPs are sent to external exchanges such as Binance, which are yet to implement the travel rule. Therefore, customers in Switzerland have to transact crypto through their non-custodial wallets.
Implementing the travel rule
The FATF formulated the travel rule to ensure VASPs comply with anti-money laundering and counter-terrorism financing laws. The travel rule is being adopted globally, and South Korea has been strict about this.
Exchanges in South Korea have been urged to ensure private wallets are verified. Some of the leading exchanges in the country have complied with the rule, as there is a March deadline, after which exchanges that fail to comply will be subject to more scrutiny and monitoring.
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