Introducing Veriscope: A Decentralized Solution to the FATF’s Travel Rule
St. Michael, Barbados, July 14, 2020 ─ Shyft Network, the global decentralized network that enables organizations, institutions, and individuals to aggregate and embed trust and validation into data stored on public and private ecosystems, has unveiled Veriscope, the solution to the Financial Action Task Force’s Travel Rule and global regulatory compliance for Virtual Asset Service Providers (VASPs).
In June 2019, the Financial Action Task Force (FATF) issued guidance requiring VASPs to share Personal Identifiable Information (PII) and Know-Your-Customer (KYC) data between a transacting originator and beneficiary “immediately” — that is, simultaneously or concurrent with the transfer itself. Specifically, the guidance stated VASPs should ensure that:
“…originating VASPs obtain and hold required and accurate originator information and required beneficiary information on virtual asset transfers, submit this information to beneficiary VASP or the financial institution (if any) immediately and securely”.
To tackle this, Shyft Network built Veriscope: a blockchain-based compliance framework, and smart-contract solution for global compliance standards, including the FATF’s Travel Rule. Veriscope levels the playing field for VASPs, and allows them to discover each other on the network, enabling them to comply with KYC and AML regulations, while protecting user’s data and privacy without relying on a centralized intermediary, or centralized registry system.
“Veriscope is a smart contract-mediated, and public key-driven VASP identity, counterparty discovery, and data transmission engine”, said Juan Aja, Co-Founder of Shyft Network, “the smart contracts allow VASP’s to manage public and private keys on behalf of themselves and their users and leverages Shyft Network core smart contracts system, to write attestation requests of outgoing cryptocurrency transactions” he added.
In addition to a specialized smart contract suite, Veriscope also makes use of a VASP discovery layer, and VASPScan, the world’s first VASP transaction explorer; VASPscan pulls attestation transactions specific to Veriscope, identifies attestations in transactions, allowing VASPs to announce to the network that they are about to initiate a cryptocurrency transaction to an address controlled by an unknown VASP. This attestation about a transaction acts as a formal request, which other VASPs listening to the discovery layer and VASPscan identify addresses under their control. The previously undiscovered VASP uses the discovery layer and Veriscopes smart contracts, mediated by Shyft Network Core, to automatically respond to the attestation request from the attesting exchange, enabling full counterparty discovery, and initiating an off-chain communication sequence.
The discovery layer, a verification and decentralized registry system built on the Shyft Network, allows users to explore, search and identify VASPs and other counter-parties on the Shyft Network discovery search engine. It also allows VASPs, represented by public addresses, to embed critical information required to initiate the initial discovery of one another after they have written an attestation of the outbound currency transaction address. Ultimately, VASPs can identify and maintain critical information such as IP addresses, endpoint information for data transmission, data transmission protocol type, links to the compliance regime of the given VASPs, and more.
“The FATF left it to the crypto industry to find a compliance solution for KYC equivalent to that required of financial institutions. Many were skeptical it could be done. Well, the industry has responded” said former FATF Executive Secretary, and Shyft Network Advisor, Rick McDonell. “Shyft Network’s Veriscope solution is not only technically viable but also provides a trusted environment in which required regulatory information is discoverable, reliable and available,” added Rick.
To make interactions safer, faster and more convenient, Veriscope’s smart contract suite also enables the codification of rules of engagement and encourages the creation of coalitions, or trust channels, between known peers and industry participants. The first coalitions formed will focus on global onboarding and governance, as well as jurisdictional coalitions for cross-industry network coordination, regulatory data requirements and initial cross-jurisdictional testing will then be initiated. VASPs globally will be able to use coalitions and their public addresses on the network to vote for ongoing changes to the system, the addition of new protocol standards and use case implementations, and more.
“Veriscope is built around three pillars: trust, coordination and discoverability”, said Joseph Weinberg, Co-founder of Shyft Network, “through Veriscope, we help CeFi and DeFi bridge the compliance gap and compete with traditional finance on a more even ground. The system enables new use cases and cross-industry systems to be created, allowing the ecosystem to better manage, share and solve regulatory threats while keeping public blockchain networks open and free. Veriscope provides a living system that our industry can leverage to solve compliance risks, and a regulatory protocol that will allow us to build global policy requirements as an industry”, he added.
Veriscope is one example of the critical infrastructure that Shyft Network has developed, and that will be enhanced with user-accessed controls built into traditional systems and future systems. Permissionless finance, trusted data, or decentralized identity applications all become possible through Shyft Network.
Shyft Network aggregates trust and contextualizes data to build an authentic reputation, identity, and creditability framework for individuals and enterprises.
For more information on Veriscope, please visit https://veriscope.network/
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