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Cryptocurrencies have significantly deviated from Nakamoto’s original philosophy over the years, morphing into a different entity. For most market participants, this deviation is insignificant as the primary goal remains profit-making. On February 25, major changes will take place in Turkey regarding the nature of blockchain, leading to a substantial reduction in anonymity for cryptocurrency wallets, a trend likely to be mirrored in regions like the US and EU.
The End of Anonymous Wallets
The US and EU have implemented various measures in this area. With the introduction of the Travel Rule, anonymity in decentralized wallets will be largely eliminated in Turkey as well. From February 25 onwards, users transferring amounts over 15,000 TL will be required to provide their identification details. For instance, if you transfer cryptocurrency worth 1000 USD from your MetaMask wallet to your local exchange account in Turkey, the exchange will need to know who owns the sending wallet.
Ahmet Usta noted that new obligations under the Travel Rule will come into effect with an official announcement published on December 25, 2024. These mandates require cryptocurrency service providers to collect and retain sender and receiver information for transfers over 15,000 TL, compelling exchanges to store details such as names, account numbers, identification numbers, wallet addresses, and transaction amounts.
EU and US Regulations
The MiCA regulation, long in the works, imposes similar responsibilities on crypto service providers in the European Union. This regulation, which includes Travel Rule implementations, aligns with global standards.
Initially established by the US Financial Crimes Enforcement Network (FinCEN) in 1996, the Travel Rule expanded over the years to include cryptocurrencies. In 2019, several countries, including Germany, Singapore, and Switzerland, legislated compliance with this rule, making it mandatory.
The US extended this rule to cryptocurrencies in 2019, and by 2021 it became a requirement. Companies are obligated to include information for transfers over 3000 dollars.
What happens next? Transfers between exchanges where KYC verification has been completed will likely process smoothly behind the scenes. However, issues may arise if a transfer from a decentralized wallet to an exchange account lacks sender information.
Exchanges may request sender information from their customers, leading to concerns about accurate data sharing. The process raises questions about the treatment of assets during this information exchange. Overall, this rule will complicate holding assets in decentralized wallets, particularly impacting decentralized finance (DeFi).
