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InAugust, Shyft Network announced Veriscope, the first public utility and application stack for solving the Financial Action Task Force (FATF) travel rule. In collaboration with some of the world’s top cryptocurrency exchanges, such as Binance, Deribit, Bitfinex, BitMEX, Tether, and Huobi, Veriscope provides a decentralized compliance web framework and a smart contract platform for Virtual Asset Service Providers (VASPs) to enable travel rule compliance. Veriscope meets the growing demands of the rising regulatory efforts that have commanded attention and action across cryptocurrency, DeFi, NFTs, stablecoins, and many other elements of blockchain.
Now, two months later, following exchanges collectively initiating the phased deployment of Veriscope on the Shyft Network, we’re proud to share that we will be open-sourcing Veriscope. This deployment makes Veriscope available for free, so that any project can connect to the Veriscope Network and the Shyft Attestation architecture.
See Open Source Repo equipped with dashboard’s and setup guides here: https://github.com/shyftnetwork/veriscope
Screenshot demo’s for the Front end web framework can be found here: https://docs.veriscope.network/docs/vasp-demo/
As early adopters of crypto, we at Shyft Core believe that it’s essential that the sector maintains openness. We also believe that compliance should not have to force the ecosystem to rebuild the existing financial system & risk user safety. To maintain decentralization, we need to promote open-source software to solve new regulatory challenges. Veriscope is that solution — and it’s ready for the world.
Shyft Network acts as layer 0 to travel rule aggregators, protocols, and data transmission services & the Veriscope framework provides an open system for anyone to leverage to enhance security guarantees, universalize the discovery and coordination processes required for cross entity data transmission, and dashboards to manage all travel rule data.
We built this system to ensure that any entity can maintain the highest level of data security, while also enabling automated discovery across any crypto transactions.
In February of 2019, the Financial Action Task Force (FATF) released guidance designed to mitigate risks around virtual assets. In section 7B of the guidance, the FATF recommends the application of the Travel Rule to virtual assets. This rule requires Virtual Asset Service Providers (VASPs), such as cryptocurrency exchanges, custodial wallets, and OTC desks to share sender and receiver information ahead of processing inter-VASP transactions on behalf of users.
FATF helps address Anti-Money Laundering (AML), a set of policies and guidelines laid out in every country’s framework to fight black money and counter terrorist financing.
As a result, it promotes KYC (Know Your Customer), a tool that acts as the first line of defense to support AML. In its most general sense, KYC is a questionnaire wherein the customer is asked certain questions and required to share personal data which is used for identification and verification purposes. Data commonly shared includes: name, address, and employment details, etc.
Suppose you’re a business, crypto exchange, governmental body, or consumer who engages with crypto or the exchange of virtual assets. In that case, it’s critical you know and understand the FATF Travel Rule — and the nuances of compliance, so that KYC can be upheld. Recent FATF guidance from back in March requires those who shepherd the transfer of assets, including cryptocurrency, to share data from senders and receivers. FATF deems these exchanges as Virtual Asset Service Providers (VASPs). Shyft Network is the first platform to create technology (Veriscope) that enables VASPs to seamlessly comply with FATF rules, partnering with ten of the top crypto exchanges to implement an industry-wide solution using our database bridging and data attestation infrastructure.
Following FATF’s guidance in March of 2021, the Versicope governance team participated in a consultation where we provided comments to their proposed guidance, a decision we made because we understand the value and opportunity we have to act as a bridge between governing bodies like FATF and crypto at large. FATF released their latest guidanceon October 28, 2021, an eagerly-awaited moment that we shared feedback on in a Twitter thread and will create regulatory situations that open-sourcing Veriscope will help solve.
From the definition of stablecoins to whether NFTs are VA (Virtual Assets) and therefore subject to regulation, FATF’s guidance will inevitably impact how users of the blockchain ecosystem will function moving forward, especially when considering the nuances of how we define different sectors and their function. Veriscope gives businesses and users the infrastructure to keep up with changes and optimize their actions, regardless of the size of their operation.
Open source Veriscope allows VASPs large and small to utilize its infrastructure to onboard, write, send and receive regulatory data sets over Shyft Network. This update allows for unlimited extensions, such as third-party tools and apps, into the system, including monitoring and analytical tools with aggregation to be embedded and utilizable. Veriscope’s infrastructure can also be repurposed and extended by any other teams who would like to use it for their internal dashboarding requirements — and they will be able to do this quickly; admin tools and setup scripts make implementation possible in less than a day.
Taking an open-source approach to building a solution for FATF is essential if we’re to ensure that we don’t gate keep systems that should remain inherently open for everyone. Shyft Network took the dated approach of many closed source companies and flipped the script (and code) to provide front ends and web frameworks for free to anyone who wants to use them. This architecture allows people to specifically implement aggregation services for the Travel Rule and enable entirely new systems to be built using the Shyft Core attestation architecture and discovery layer.
This is only the beginning of a much larger set of products and services that will span other verticals across the industry utilizing this open source infrastructure and framework.
By open sourcing Versicope, Shyft Network is democratizing Travel Rule compliance for a varied set of businesses, exchanges, technologies, and their communities. We know that together crypto is stronger and that if mainstream adoption of blockchain is to become reality, we must evolve so that institutions, exchanges, and individuals can function together and comply with any incoming regulation.
Shyft Network is a public protocol designed to aggregate and embed trust, validation, and discoverability into data stored on public and private ecosystems, and facilitate information transfer between permissioned and permissionless networks. By incentivizing individuals and enterprises to work together, Shyft Network allows for the layering of context on top of data, turning raw data into meaningful information.
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