Virtual currencies are moving toward legal regulations, and travel rules will be applied not only to MEXC but also to other exchanges. This section explains the contents of the travel rules. But users don’t really care.
- What are Travel Rules?
- Why were the Travel Rules created?
- Digression: Warning from Japan’s Financial Services Agency
- Countries covered by Travel Rules
- Notification target of travel rule
- Impact of travel rules
- Open an account
What are Travel Rules?
The travel rule is that exchange agents that send virtual currency must notify the exchange agent on the recipient side of the recipient of certain items regarding the sender and recipient. This rule is an international standard established by FATF (Financial Action Task Force). FATF is an international organization that promotes the regulation of international standards. It consists of a total of 39 countries and regions, including the United States and European countries. We will mutually review the regulations of each country and judge whether they comply with the standards. Countries with high cryptocurrency transactions are members of the FATF.
Why were the Travel Rules created?
The reason why the travel rule was created is simple, but it is a crime prevention measure. Cryptocurrency exchanges have long been famous for their frequent hacking incidents. Since virtual currency exchanges are targeted by terrorists and criminals, this rule was created with the aim of enabling tracking in the event of unauthorized use. However, due to the new system, there are differences in progress, and there are many countries and exchanges that do not comply with the Travel Rule.
Digression: Warning from Japan’s Financial Services Agency
A warning from the Japanese Financial Services Agency has been issued to MEXC. This is March 2023. Japan’s Financial Services Agency has pointed out that MEXC “has been conducting a crypto asset exchange business for Japanese residents through the Internet.” MEXC is known as one of the world’s major cryptocurrency exchanges with a particularly high trading volume among cryptocurrency exchanges, and is widely used by Japanese people because it provides various services.
Although it is unknown at this time what kind of response each exchange will take in response to this warning, it is possible that measures such as restrictions on new registrations will be taken for Japanese people. Therefore, although it is unknown at this time, it will be necessary to pay attention to future movements.
Countries covered by Travel Rules
Travel rules apply to the following countries and regions designated by the Financial Services Agency of Japan as notification target countries.
- United States
- Cayman Islands
- South Korea
- Hong Kong
Notification target of travel rule
The Japan Financial Services Agency (FSA) has established a new “obligation to notify the sender/recipient information when transferring crypto assets/electronic payment methods” to crypto asset exchange service providers and electronic payment method business operators. It stipulates as follows.
- all users
- Transfer to a domestic VASP or transfer to an overseas VASP designated by the Financial Services Agency
- All transfers regardless of amount or type
Impact of travel rules
What kind of impact will the introduction of travel rules have on users who have accounts on virtual currency exchanges? It has the following points.
Fraudulent transactions and money laundering
This travel rule is to deter fraudulent and criminal acts such as fraudulent transactions and money laundering. The introduction of travel rules will create an environment where general users can trade safely, so it will be a safe environment.
Possibility of inability to send money
Depending on the exchange, it may be difficult to transfer funds due to travel rules. In addition, it may take time and costs to confirm and complete the notification provided to the remittee. There is also the risk of user dissatisfaction.
Open an account
In order to actually start investing, you must first open an account. MEXC allows you to open an account for free, so you can easily open an account. The article below explains how to open an account, so please refer to it.