Those using local regulated cryptocurrency exchanges in Australia will face stricter transfer rules from Wednesday. With the introduction of the practice known as “travel rule” in the country, additional identity and counterparty information will be required for all crypto asset transactions sent and received through regulated platforms.
Additional information requirement for transfers
Starting in July, for every transfer made on licensed crypto platforms in Australia, users will be required to share some information about the recipient or sender. These include the name of the person to whom the transaction was made and the name of the platform to which the transfer is linked. Since the rule does not contain a lower limit depending on the amount, it covers all transactions, including small amount transfers.
Gabby Lewis, head of fraud and financial crime at Swyftx, said the impact would be limited for most users.
Gabby Lewis stated that users will share the necessary information largely once, and that this information can later be recorded and reused in subsequent transactions.
The regulation has been a subject of debate for a long time due to the association of users’ personal data with blockchain transactions and the risk of this information leaking. On the other hand, Lewis emphasized that the practice in question is not specific to crypto assets and that similar obligations have long been valid in other areas of financial services.
The goal of harmonization with the international framework
The step taken by Australia aims to harmonize with countries that have already implemented these rules, such as the European Union, the USA and the United Kingdom. The Financial Action Task Force expanded this framework to crypto asset transfers in 2019.
The main purpose of the rules is to increase the traceability of transfers in the fight against money laundering, terrorist financing and fraud. The audit of the application will be carried out by the country’s financial intelligence agency, AUSTRAC.
Mini dictionary: Travel rule is a compliance rule that requires sharing certain information about the sender and receiver between service providers in virtual asset transfers. AUSTRAC is the official financial intelligence agency in Australia responsible for combating money laundering and financial crime.
Cold wallet transfers are also included
Additional verification will also be required when sending crypto from a regulated exchange to a personal storage address, such as a cold wallet. Users will be expected to declare and verify that they own this address.
Lewis noted that this stage usually consists of a quick confirmation that the wallet belongs to the user, and additional steps mainly come into play in transfers involving another person or another exchange.
In this respect, Australia stands in line with countries such as France, the Netherlands and Japan, which do not impose lower limits. The USA, on the other hand, only collects information on transfers of $3,000 or more.
Exchanges have started preparations, user reactions are mixed
Some platforms operating in Australia have already started to implement the application. While Kraken started the process on March 31, CoinJar also implemented the new rules on Tuesday. The regulation is being implemented as part of the legal framework adopted by the Australian parliament in 2024.
Different opinions came to the fore in online user comments. While some users argued that the possibility of anonymous transfers would virtually disappear, others stated that regulated platforms were never fully anonymous anyway. Some users also suggested that new obligations could increase the use of cold wallets in particular.
