The world leader in digital payments PayPal entered the world of cryptos in 2022 and continues to get more and more involved.
PayPal and Coinbase join forces to comply with regulations
Paypal has just joined Coinbase’s Travel Rule Universal Solutions Technology (TRUST) network after a custom audit.
Trust is initiated by leading crypto players and currently includes 38 companies. The TRUST network had only 18 members in February, it has grown rapidly in recent months.
The Financial Action Task Force (FATF) had issued its latest recommendations in 2021, which are followed by the world’s largest economies, including the G7 countries. They imply that all transactions above $1,000 of cryptocurrencies should be tracked, with the collection of identity information.
This is therefore potentially a major drag on crypto businesses, which is why the TRUST network was created, initiated by Coinbase. Several big names in the ecosystem are already present, including Binance.US, Kraken, Robinhood, Circle or even Paxos.
Other companies participating in the network include USDC issuer Circle, investment manager Fidelity Digital, stock trading app and crypto lender Nexos.
In addition, the Trust network focuses as its name suggests on the travel rule. It requires financial institutions to share accurate user information when money is transferred above a certain amount.
As a reminder, PayPal launched cryptocurrency transactions in October 2020. This summer, it further expanded those capabilities, allowing customers to withdraw and deposit cryptocurrencies for the first time in June.
Presumably, PayPal ‘s growing crypto capabilities mean it must comply more broadly with regulations. Therefore, it has made a decision to join the Coinbase network can help it in this regard.
PayPal will work with other members of the TRUST network to improve compliance with the Bank Secrecy Act’s travel regulations imposed on U.S. banking institutions. When a consumer makes a transaction that exceeds a certain threshold, the law requires financial institutions to disclose information about that customer.