Fintech

Know your crypto customer? The industry is facing down the Travel Rule.

The crypto Travel Rule group, which includes Coinbase, Anchorage Digital and Robinhood, offers a way for companies to comply with a key FinCEN rule.

Coinbase Chief Legal Officer Paul Grewal

Largely by design and to the chagrin of law enforcement, keeping track of personal information isn’t the norm in decentralized, blockchain-based transactions.

Photo: Coinbase

Sending huge amounts of money by wire anonymously violates a government rule that says information about who is sending how much to whom must “travel” with that transaction.

But the Travel Rule, as it is called, has been a headache in crypto, where pseudonyms reign (who’s Satoshi Nakamoto again?). Largely by design and to the chagrin of law enforcement, keeping track of personal information isn’t the norm in decentralized, blockchain-based transactions.

That could change with a new crypto organization that’s building a system that would enable its members to comply with Travel Rule requirements, while maintaining a degree of privacy and anonymity valued in crypto.

The Travel Rule Universal Solution Technology, or TRUST, is introducing itself Wednesday with 18 initial members, including major companies like Coinbase, Circle, Anchorage Digital, Gemini and Robinhood.

The Travel Rule requirement is challenging for crypto, since “unlike traditional financial institutions,” crypto companies use “a very decentralized infrastructure that we rely upon in order to track these different transactions,” Coinbase Chief Legal Officer Paul Grewal said. “With permissionless blockchains, there's no way to understand whether a wallet address on the other side of a transaction belongs to a financial institution or to an individual or anybody else.”

TRUST hopes to fix that with a network in which exchanges will be able to verify each other’s addresses before facilitating transactions, Grewal said. (In the United States, transactions of $3,000 or more must comply with the Travel Rule.)

The network also includes two important design features: It will not store “sensitive kinds of customer information, either on the TRUST platform itself or with any kind of third party,” Grewal said. Any information shared on the network will be encrypted, and addresses will be hashed before they are shared, he said.

“We encrypt that transmission, so that only the sender and the recipient have access to it, and then that way, we make sure that no one is interfering with that or gaining unauthorized access in some untoward way,” he said.

The network will make it possible “to first confirm the identity of that wallet address before any information is sent, and then to have the information transmitted peer-to-peer directly from one exchange to the other so that we're not pooling information in any central place that could obviously become a honeypot for nefarious actors,” Grewal said.

Michael Fasanello, director of Training and Regulatory Affairs at the Blockchain Intelligence Group, said that was a real risk.

“That kind of curated personal information is, quite literally, digital gold,” he said, which is why encrypted and decentralized data would be “a critical part of any Travel Rule implementation in digital assets.”

Grewal said the initiative has received “an extraordinarily positive reaction” from FinCEN, the Treasury Department’s financial crimes enforcement body. FinCEN could not be reached for comment ahead of the group’s announcement.

Jonah Crane, a partner at the Klaros Group, said the new organization “should provide a path to compliance for participating firms.” Christine Brown, Robinhood’s COO for crypto, said the new organization shows that “it takes a community of crypto businesses and platforms to work together to find a solution to preserve customer privacy while meeting the legal requirements of the Travel Rule.”
Fintech

Judge Zia Faruqui is trying to teach you crypto, one ‘SNL’ reference at a time

His decisions on major cryptocurrency cases have quoted "The Big Lebowski," "SNL," and "Dr. Strangelove." That’s because he wants you — yes, you — to read them.

The ways Zia Faruqui (right) has weighed on cases that have come before him can give lawyers clues as to what legal frameworks will pass muster.

Photo: Carolyn Van Houten/The Washington Post via Getty Images

“Cryptocurrency and related software analytics tools are ‘The wave of the future, Dude. One hundred percent electronic.’”

That’s not a quote from "The Big Lebowski" — at least, not directly. It’s a quote from a Washington, D.C., district court memorandum opinion on the role cryptocurrency analytics tools can play in government investigations. The author is Magistrate Judge Zia Faruqui.

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Veronica Irwin

Veronica Irwin (@vronirwin) is a San Francisco-based reporter at Protocol covering fintech. Previously she was at the San Francisco Examiner, covering tech from a hyper-local angle. Before that, her byline was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisc.

The financial technology transformation is driving competition, creating consumer choice, and shaping the future of finance. Hear from seven fintech leaders who are reshaping the future of finance, and join the inaugural Financial Technology Association Fintech Summit to learn more.

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FTA
The Financial Technology Association (FTA) represents industry leaders shaping the future of finance. We champion the power of technology-centered financial services and advocate for the modernization of financial regulation to support inclusion and responsible innovation.
Enterprise

AWS CEO: The cloud isn’t just about technology

As AWS preps for its annual re:Invent conference, Adam Selipsky talks product strategy, support for hybrid environments, and the value of the cloud in uncertain economic times.

Photo: Noah Berger/Getty Images for Amazon Web Services

AWS is gearing up for re:Invent, its annual cloud computing conference where announcements this year are expected to focus on its end-to-end data strategy and delivering new industry-specific services.

It will be the second re:Invent with CEO Adam Selipsky as leader of the industry’s largest cloud provider after his return last year to AWS from data visualization company Tableau Software.

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Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.

Image: Protocol

We launched Protocol in February 2020 to cover the evolving power center of tech. It is with deep sadness that just under three years later, we are winding down the publication.

As of today, we will not publish any more stories. All of our newsletters, apart from our flagship, Source Code, will no longer be sent. Source Code will be published and sent for the next few weeks, but it will also close down in December.

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Bennett Richardson

Bennett Richardson ( @bennettrich) is the president of Protocol. Prior to joining Protocol in 2019, Bennett was executive director of global strategic partnerships at POLITICO, where he led strategic growth efforts including POLITICO's European expansion in Brussels and POLITICO's creative agency POLITICO Focus during his six years with the company. Prior to POLITICO, Bennett was co-founder and CMO of Hinge, the mobile dating company recently acquired by Match Group. Bennett began his career in digital and social brand marketing working with major brands across tech, energy, and health care at leading marketing and communications agencies including Edelman and GMMB. Bennett is originally from Portland, Maine, and received his bachelor's degree from Colgate University.

Enterprise

Why large enterprises struggle to find suitable platforms for MLops

As companies expand their use of AI beyond running just a few machine learning models, and as larger enterprises go from deploying hundreds of models to thousands and even millions of models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

As companies expand their use of AI beyond running just a few machine learning models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

Photo: artpartner-images via Getty Images

On any given day, Lily AI runs hundreds of machine learning models using computer vision and natural language processing that are customized for its retail and ecommerce clients to make website product recommendations, forecast demand, and plan merchandising. But this spring when the company was in the market for a machine learning operations platform to manage its expanding model roster, it wasn’t easy to find a suitable off-the-shelf system that could handle such a large number of models in deployment while also meeting other criteria.

Some MLops platforms are not well-suited for maintaining even more than 10 machine learning models when it comes to keeping track of data, navigating their user interfaces, or reporting capabilities, Matthew Nokleby, machine learning manager for Lily AI’s product intelligence team, told Protocol earlier this year. “The duct tape starts to show,” he said.

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Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

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