Bittrex Compliance Chief Sees TRUST as Crypto Industry Standard

In the world of crypto exchanges, user privacy and security are paramount, and companies are stepping up their efforts to provide a safe experience for consumers and preparing for any potential regulation that may require a high level of compliance.

In an interview with PYMNTS, Michael Carter, chief compliance officer at Bittrex, discussed the TRUST platform created by 18 crypto services providers across the U.S. as a way for crypto exchanges to comply with the Financial Action Task Force travel rule (which requires custodial crypto exchanges to collect and share data about the senders of specific transactions), while at the same time upholding the privacy and security of customers.

In Carter’s view, TRUST could become the industry standard for compliance. “The response has been positive, and the platform is already working on adding new members,” he said. “As TRUST continues to expand, it is our hope that regulators and TRUST members can work in tandem to ensure the safety and security of the crypto industry and its users. TRUST and its members have maintained open communications with regulators at state and federal levels about the group’s approach to the travel rule solution throughout the process.”

What makes this platform different and ensures compliance with privacy regulations is that sensitive customer information is never centrally stored, which mitigates concerns surrounding hackers, he said. Instead, information is sent with end-to-end encryption from one TRUST member to another. And to ensure the safety of the user data, all TRUST members are required to meet minimum privacy and security requirements.

When asked about whether TRUST will be limited to the U.S., Carter suggested that as the travel rule’s reach isn’t limited just to the U.S., neither should TRUST. Although TRUST isn’t yet ready to accept new members from around the globe, organizers are working on getting ready.

This collaborative effort comes as most of the crypto exchanges are facing regulatory challenges. One of the biggest nuances custodial exchanges face is how to navigate the regulatory definitions of new product offerings. “Digital asset innovation and regulation is an emerging space with constant change and with the creation of new products comes new regulatory uncertainty,” Carter said.

Asked about the two things that will make his role as compliance chief easier, Carter said better regulations come first.

“Refining and better defining regulations to address crypto-specific issues, including the technological nuances of blockchain technology across the ecosystem, the enhanced secondary and indirect risk exposure to an inherently globally-interconnected product, and the real-world uses of various crypto products,” he said.

Second is proof of the commitment the company has to privacy and security for consumers. He would like to see better RegTech products offerings that prevent synthetic ID fraud and in-depth risk analysis about customers and behaviors in near real time. There are some solutions in this field, but this is an area where there is still room for improvement.

Compliance is always important for any company but in the crypto industry a key concern is preventing, detecting and reporting money laundering, terrorism financing, fraud or tax evasion. This is even more true after the U.S. Treasury added crypto rules to the Russian sanctions, putting a special emphasis of the compliance risks that crypto exchanges will likely face in the following days and weeks.

Read more: US Treasury Adds Crypto Rules to Russia Sanctions

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