Educational webinar
Identification Lens for Travel Rule solutions
April 2021
1
How to assess Travel Rule technical solution providers
Lens 4: Governance
Lens 1: Technology
Lens 2: Identification
Lens 3: Implementation
4 Lenses
How the required data is exchanged
How to identify a beneficiary VASP
Installation and development progress
VASP onboarding policy and operation
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Agenda
3
Identify who is the beneficiary VASP
Unclear identity of wallet address
Hosted/ unhosted
Receiving and verifying ownership of the wallet address
This step is similar to a postal service where the sender writes the receiver’s info on an envelope and posts it into a mailbox.
Lens 2: Identification
VASP due diligence
Cybersecurity
Privacy policy
Licensing status
4
Three Key Benchmarks
Lens 2: Identification
VASP Directory
The counterparty VASP must be verifiably identified through a proven licensing or due diligence process.
Efficiency
Fast execution and low cost are non-negotiable elements �required to conduct millions of identifications each day.
Address Format
The existing wallet address format must be preserved in order to minimize the migration's disruption.
1sdLIDI2sVASPDIRECTORYsdahv3Hdn2w
1sdLIDI20T42GsEFFICIENCY3silnc1sdahv3
1s781cfwlADDRESSFORMATW98tiBsKSLe
5
CHART: Identification Protocol Comparison
Lens 2: Identification
Type | URL | Smart Contract | Bulletin Board | Sygna Centralized Directory |
VASP Directory | | ✓ | ✓ | ✓ |
Keep Address Format | | | ✓ | ✓ |
Efficiency | ✓ | ✓ | | ✓ |
How is the beneficiary VASP identified by the originator?
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Protocol 1: URL Format
Lens 2: Identification
URL Format Wallet Address Format
https://vasp.com/userID 1pkqprwpT2fkdX79A7NCHptvWtiBsKSLe
↓ ↓
VASP Code User Code
Instead of a wallet address format, a new URL-type server endpoint format to represent each unique user can be established.
VASPs connect without validations
Once the URL has been provided, a messaging channel can be created by both VASPs.
Connect directly with URL endpoints
Originator VASP
Beneficiary VASP
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Protocol 1: URL Format
Connect directly with URL endpoints
Lens 2: Identification
Originator VASP
Beneficiary VASP
VASP Directory | | No validations to the counterparty VASP |
Keep Address Format | | Requires extra migrations to change the wallet address format into an URL format |
Efficiency | ✓ | Directly exchanges data with the counterparty VASP |
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Protocol 2: Smart Contract
Information is registered on-chain
Every VASP uses a standard smart contract to register their information on a public blockchain.
Lens 2: Identification
Verify with on-chain directory
VASP
Smart Contract
IBAN-like format
A new unique code can be applied to each customer
bb42 8798 524e e3fb 0828 09d3 1pkqprwpT2fkdX79A7NCHptvWtiBsKSLe
↓ ↓
VASP Code User Code
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Protocol 2: Smart Contract
Verify with on-chain directory
Lens 2: Identification
VASP
VASP Directory | ✓ | Directory of trusted VASPs on-chain |
Keep Address Format | | Requires extra migrations to update the wallet address format into a SWIFT IBAN format |
Efficiency | ✓ | Reading information on-chain is cheap and fast |
Smart Contract
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Protocol 3: Bulletin Board
A centralized messaging platform for every VASP to post transfer requests.
Lens 2: Identification
For originator VASPs to search who owns the address.
For beneficiary VASPs to claim address ownership.
Screening of all transfer requests required but only the right ones are picked up.
Pick up requests
Post transfer requests
Originator VASP
Beneficiary VASP
Bulletin Board
Uses the original Wallet Address format without a VASP code or user code design, for example 1pkqprwpT2fkdX79A7NCHptvWtiBsKSLe
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Protocol 3: Bulletin Board
Lens 2: Identification
VASP Directory | ✓ | Only trusted VASPs can access the bulletin board |
Keep Address Format | ✓ | Wallet address remains in the same format |
Efficiency | | Limited efficiency as every VASP should screen every transaction in the network |
Pick up requests
Post transfer requests
Originator VASP
Beneficiary VASP
Bulletin Board
12
Sygna Bridge - Centralized Directory
Compliance with multiple data standards
Sygna Bridge uses proven protocols to bundle the information into one data string.
Lens 2: Identification
ISO 9362, a SWIFT Business Identifier Code standard for entity identification
BIP 21, blockchain protocol used for payment
IVMS101, an industry-led common language messaging Travel Rule standard
13
Sygna Bridge - Centralized Directory
Lens 2: Identification
Step 2
Sygna redirects each transfer request to the assigned trusted VASP
Send Transfer Request
Pass the request
Originator VASP
Beneficiary VASP
Sygna
Example:
Beneficiary user: Bob Harris, New York
bitcoin:175tWpb8K1S7NmH4Zx6rewF9WQrcZv245W?personType=NaturalPerson&primaryIdentifier=Bob-Harris&vc=VASPUSNY
↓ ↓ ↓
Payment Format(BIP 21) User Code (IVMS101) VASP Code(SWIFT BIC)
Step 1
Beneficiary users must share their account information.
Beneficiary User
Originator
User
Here is my wallet address and VASP and user code
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Sygna Bridge - Centralized Directory
Send Transfer Request
Pass the request
Lens 2: Identification
Originator VASP
Beneficiary VASP
Sygna
VASP Directory | ✓ | Only trusted VASPs can access the server |
Keep Address Format | ✓ | Keeps the wallet address format |
Efficiency | ✓ | Routes messages in as little as 0.5 seconds per transfer cycle |
Step 1
Step 2
Beneficiary User
Originator
User
Here is my wallet address and VASP and user code
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The VASPs that have gone live with Sygna
Lens 2: Identification
Singapore crypto exchange which ranks 50-70 on CoinMarketCap
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WORKFLOW: Identification Protocol Comparison
Lens 2: Identification
Counterparty Verification
Keep Address Format
URL
Efficiency
Smart Contract
Bulletin Board
Sygna
No
Yes
No
No
Yes
Yes
17
About CoolBitX
Company History
2020
Series B led by SBI Holdings, the National Development Fund of Taiwan, and Monex to help the development of Sygna.
CoolBitX Ltd. (CBX) is a Taiwan-based Fintech company that builds secure and user-friendly blockchain and crypto-asset solutions.
Founded in 2014, CoolBitX launched the CoolWallet, the world’s first mobile hardware wallet, in 2016.
In 2019, CoolBitX introduced Sygna to help Virtual Asset Service Providers (VASPS) to effortlessly share all required compliance data in line with global regulation standards.
CoolBitX’s mission is to provide the tools necessary to create a more secure and empowered future for cryptocurrency users.
2014
Company founded
2017
CBX raises $500k seed funding and begins development on CoolWallet S
2018
SBI Holdings invests during Series A funding after the global release of CoolWallet S
2019
CBX launches the Sygna Bridge API to help VASPs comply with FATF’s Recommendation 16
2016
Indiegogo campaign raises $28,686 for the 1st-generation CoolWallet.
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For additional information or to schedule a demo,
please contact services@sygna.io
Thank you
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