What Is The OpenVASP Association?
Since 2009, the cryptoverse has been evolving at a swift pace and is not going to stop. Apart from the obvious - technology, innovation and the building of new unique products - a fundamental element of this evolution is the application of Regulations. Regulations are shaping the industry slowly and setting up new boundaries.
The Financial Action Task Force (FATF) has been trying to subject the crypto industry to similar rules as the ones in force for Financial Institutions. One of the most challenging and the most disputed is the Financial Action Task Force’s (FATF’s) Recommendation 16. Recommendation 16, more commonly known as the Travel Rule, states that Virtual Asset Service Providers (VASPs) must collect and exchange identifying information on the originator and beneficiary when conducting transactions with other VASPs and other “obliged entities”. The FATF recommendations are not binding and must be implemented by each country in order to become binding to entities.
Depending on a jurisdiction’s local laws, unhosted wallets may fall into scope, mandating VASPs to collect information and verify ownership.
Since the Travel Rule requires communication between distinct companies, a collaborative approach was needed to reach common grounds where every party could continue to transact compliantly while exchanging sensitive data securely.
This is how OpenVASP is born.
What is OpenVASP?
The OpenVASP initiative was launched in November 2019 by Bitcoin Suisse, Lykke, Seba Bank, Sygnum, Avaloq and MME, with the Crypto Valley Association (CVA) and the International Digital Asset Exchange Association’s (IDAXA) support.
The association is dedicated to advancing compliance in the virtual asset industry. It aims to help the crypto industry to comply with the Travel Rule by creating a technological solution designed by main industry players as well as setting up compliance standards. It started as a working group in 2019, when the Swiss Regulator published its “payment on the blockchain” guidance and, on 27 March 2020, was incorporated as a non-profit association in Zug, Switzerland.
The main goals of the OpenVASP Association are :
To enable VASPs and other entities to fully comply with the FATF’s Travel Rule,
To maintain an open, decentralized and privacy by design and well-built protocol for the transmission of transaction information between VASPs and other parties,
To set up governance and compliance standards allowing better industry cooperation and collaboration for this protocol to guarantee privacy and decentralization.
The OpenVASP Association adopted its name per these goals: the need for an open and decentralized protocol and standards for VASPs.
The OpenVASP Association brings its formal governance to the Travel Rule Protocol (TRP), which is the messaging system allowing communication between VASPs. Due to its simplicity, custom implementations of the TRP API can be developed, allowing VASPs to build their own Travel Rule solutions and integrate the API directly into their existing systems.
Moreover, the Association plays a crucial role in:
Enhancing TRP as a messaging standard among VASPs, based on the needs and requirements of its members,
Providing shared resources for VASPs using the protocol, such as identity verification or standard terms/contracts,
Providing a common contact point for regulators and supranational organizations through weekly meetings, active community involvement and an online chat forum,
Fostering an ecosystem of commercial and non-commercial partners supporting VASPs using the protocol,
Minimising fragmentation of Travel Rule solutions in the industry,
Promoting compliance in the virtual assets industry.
How Has the OpenVASP Association Contributed to the Crypto Ecosystem?
The OpenVASP Association has the aim of helping VASPs meet Travel Rule compliance standards. This is illustrated in many forms, such as through its open and decentralized technological solution, TRP. OpenVASP has been working since its very start with a list of trusted providers which have been building up ready-to-plug-in and customised solutions implementing TRP and allowing full compliance with the Travel Rule. The OpenVASP Association provides a forum where its members share a common goal of advancing and enhancing the protocol in a collaborative approach open to all to participate, leveraging the knowledge of best-in-class industry compliance officers and technological providers, making Travel Rule compliance as streamlined as possible for all parties involved.
OpenVASP has also developed the InterVASP Messaging Standard (IVMS) Validator to help the industry make sure that the data contained in their messages use a similar format.
Who Is Part of the OpenVASP Association?
The OpenVASP Association is composed of more than 25 members ranging from technology companies and law firms to VASPs, as well as banks, brokerage and investment firms, and blockchain analytics providers.
Who Is the OpenVASP Association For?
The OpenVASP Association is open to anyone and everyone who needs to comply with the Travel Rule and who shares the common goal of advancing an open, decentralized and robust protocol with privacy at its core to meet the FATF’s Travel Rule.
What Is the Travel Rule Protocol (TRP)?
In late 2021, the OpenVASP Association merged with the Travel Rule Protocol. This merger allowed the combination of strong and mature tech in the form of Travel Rule Protocol (TRP) version 2, which provided more comprehensive workflow options for an easier end-user journey with the powerful governance framework and expert network of the OpenVASP Association.
TRP version 3 is the official protocol of the OpenVASP Association. It enables a permissionless peer-to-peer implementation of the Travel Rule as defined in the principles of the OpenVASP Association.
What Is the IVMS Validator?
In order for VASPs to exchange the mandatory information between themselves, a uniform language (data structure) is required. Without similar data formatting, the exchange of information cannot happen in the best possible way. Consequently, the interVASP Messaging Standard (IVMS 101) was developed and is currently under review to be enhanced and improved.
After the development of IVMS 101, the OpenVASP Association recognised that VASPs needed a tool to ensure compliance with IVMS 101 OpenVASP, and 21 Analytics took the initiative to further aid the ecosystem by developing the IVMS Validator.
How Can Members Participate?
The OpenVASP Association welcomes members’ participation. This can be achieved through various channels - the weekly TRP call, GitLab input and chat - using the Slack channel.
Every Monday, OpenVASP hosts a free call for anyone to participate. To join the call, you just need to send a request to join. During these meetings, the working group share their knowledge and ideas on improving the existing protocol, TRP, and discuss all Travel Rule-related topics and news.
On GitLab, members can make suggestions and proposals on how to refine and improve the existing TRP standards and its extensions. All suggestions are put to a vote in the weekly TRP call, providing a fair and favourable outcome.
The OpenVASP Slack channel is for general Travel Rule discussions. This includes crypto news and regulations updates, receiving the weekly TRP call link and call summaries. It also allows the community to ask questions and think about solutions together in order to comply while allowing a smooth customer experience.
How Can I Become a Member?
Please contact us to learn more about becoming an OpenVASP Association member. This can be done via email or through the OpenVASP Slack channel.
*For further information on the Travel Rule, please see the FATF’s Updated Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers, or reach out to our expert Board members