FATF Travel Rule: What It Means for Crypto Exchanges and Users

When you send crypto from one wallet to another, the FATF travel rule, a global standard for tracking cryptocurrency transfers to prevent money laundering. Also known as Recommendation 16, it requires virtual asset service providers to share sender and receiver info on transactions over $1,000. This isn’t just paperwork—it’s changing how exchanges operate, how users send money, and even how wallets are built.

The rule targets virtual asset service providers, companies like exchanges and custodial wallets that handle crypto on behalf of users. If you use Binance, Coinbase, or Kraken, they’re required to collect names, IDs, and wallet addresses for every transfer above the threshold. Non-custodial wallets like MetaMask don’t collect this data—so the rule forces exchanges to block transfers to or from unverified wallets. That’s why you might see warnings when sending to a personal wallet: it’s not a glitch, it’s compliance.

This rule connects directly to KYC compliance, the process of verifying a user’s identity before allowing crypto transactions. Without KYC, the travel rule can’t work. That’s why exchanges now demand ID uploads, selfies, and even proof of address. Countries like South Korea and Japan are already enforcing this strictly, as seen in Upbit’s massive KYC violation cases. Meanwhile, places like Iran and Morocco are finding ways around it—not because they reject regulation, but because they need crypto to survive economic sanctions.

It’s not just about stopping criminals. The AML crypto, anti-money laundering efforts applied to digital assets framework behind the travel rule is meant to make crypto less attractive to bad actors. But it’s also making life harder for regular users. Sending crypto to a friend? Now it might require more steps than sending a bank wire. And if you’re using a decentralized exchange, you might hit walls where the system refuses to process your trade unless the counterparty is verified.

Some exchanges are pushing back. Others are building tools to automate compliance. But the trend is clear: crypto is becoming more regulated, not less. The FATF travel rule is one of the biggest forces shaping that change. And if you’re trading, staking, or even just holding crypto, you’re already living with its effects.

Below, you’ll find real-world examples of how this rule plays out—from exchange reviews that mention compliance hurdles, to country-specific guides showing how users adapt, to deep dives into how KYC violations can shut down platforms. This isn’t theory. It’s happening now, and it’s affecting every transaction you make.