Recently, Singapore incorporated a new transfer requirement that requires users of crypto wallets to provide additional information–including ID number and residential address–for both outgoing and incoming digital token transfers. Called the Travel Rule, following its incorporation, crypto exchanges such as Crypto.com and Gemini introduced a new measure to comply with the regulation.

As a digital wallet infrastructure platform, Liminal aims to help its users comply with the regulation by securing a partnership with end-to-end crypto solution provider Notabene.

The collaboration allows Liminal and Notabene to provide an integrated solution for compliant crypto transactions which included the provision a plug-and-play Travel Rule solution within its platform for its clients.

“Crypto wallets, and especially businesses that hold digital assets on behalf of their users, have been experiencing attacks on various fronts. For example, if [criminals] stole their private keys on a server or on a hot wallet, then their server might get compromised and they will lose their funds. Then, there are other examples such as a single point of failure or sometimes a situation where only one person is in charge of handling the keys, wallets, and digital assets then sometimes they got compromised,” explains Liminal Founder Mahin Gupta in an interview with e27.

He then explains how the partnership with Notabene comes to be and how they plan to make a difference with it. According to Gupta, his company was impressed by Notabene’s move of figuring out how their tech solutions can help digital wallets with compliance which started even when the Travel Rule was still being discussed.

Also Read: What opportunities lie ahead for compliance technology in 2020 and beyond

“The team had noticed the usefulness of this protocol and technology, so they started working on it,” he says.

Gupta further explains how the Travel Rule is a difficult protocol to implement, particularly in the matter of creating stability in a cold wallet or hot wallet with millions of people transacting using it.

“Different countries have different thresholds and reporting standards, so it’s a complicated product to build,” he says.

“Now, if you expect a startup to build this product, it will be really difficult for them, because most of the time, their focus will be on their use case–rather than getting compliant. Unfortunately, because of that, a lot of startups work in an insecure or incompliant manner.”

In addition to helping Liminal set up the configuration in a speedy manner, the partnership also enables Liminal’s users to use the platform without transaction limits.

“This is a very big and important part because you want to remove as much resistance as possible from the startups to become more compliant. You want to make sure that compliance and regulation don’t become just an obligation, but also a part of their infrastructure and product strategy,” he stresses.

“Because of the reduction in their development effort and timeline, plus their initial investment into using the solution, the startups are more inclined and incentivised to implement Travel Rule. Eventually, if most startups start implementing Travel Rule, it will eventually improve the number of transactions being travelled with compliance. That will give more and more confidence to regulators and various stakeholders to allow more activity into the digital assets ecosystem.”

Also Read: Why fintech companies and regulators need to collaborate on gaining trust and compliance

Compliance is the way to go

As a digital wallet infrastructure platform, Liminal aims to build an efficient and compliant wallet operating system where users can with various digital assets and blockchains securely.

Its customers are mainly in the Asia Pacific and MENA regions which Gupta notes as having different characteristics and needs. Its clients include crypto exchanges or digital asset businesses that use the tech provider to build their wallet infrastructure platform. They also have traditional businesses that want to be able to manage their assets using the technology, DeFi platforms, and many more.

Gupta says that Liminal has recently crossed US$5 billion worth of transactions and attained CCSS Level 3 certification which he considers a big milestone for the young company.

In its business strategy, Liminal puts emphasis on the importance of compliance in building an efficient solution.

“It may look like a short-term pain, but in the longer run, this is going to help the industry and the existing players who are still building. It will make them stronger and better, an actual revenue-generating and value-providing business,” he says.

“We want to make sure that every business … has an opportunity to build an efficient, compliant and secure wallet infrastructure so that they can build the various use cases on digital assets.”

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Image Credit: Liminal

 

 

 

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