Trezor hardware wallet is integrating an automated method of sharing proof that a user holds a private bitcoin wallet when transacting with a regulated exchange in Switzerland.
The Address Ownership Proof Protocol (AOPP), developed by crypto startup 21 Analytics and compatible with wallets such as BitBox and Edge, was created to accommodate the Swiss Financial Market Supervisory Authority’s (FINMA) implementation of anti-money laundering (AML) requirements for cryptocurrency firms.
Beyond the recommendations of the Financial Action Task Force (FATF), Switzerland’s crypto regulations include the identification of private wallets dealing with the country’s virtual asset service providers (VASPs).
The expansion of AML rules into the domain of private or non-custodial wallets is something that most governments are only beginning to consider — much to the chagrin of crypto proponents. However, Switzerland and Singapore already require authentication for transactions exceeding $1,000 using what the FATF refers to as “unhosted wallets.”
“Switzerland has some particularly stringent restrictions when it comes to the ‘travel rule,’ and FINMA has always been in the forefront of implementing everything the FATF publishes very rapidly,” 21 Analytics CEO Lucas Betschart said in an interview. “So the Travel Rule is truly being followed here.”
When it comes to determining who owns private wallets, VASPs in Switzerland have been requiring users to upload a screenshot of their wallet or perform a “Satoshi Test,” in which a certain quantity of money is sent to a verified wallet to prove receipt. Manual signing in with a private key is another option, according to Betschart. He went on to say that AOPP streamlines and automates the manual signing procedure.
“We’re delighted to see more people taking control of their crypto assets,” said Marek Palatinus, CEO of SatoshiLabs, the maker of the Trezor hardware wallet. “AOPP makes it easier and faster for customers to withdraw their money to the safest place for them: their Trezor.”
Betschart further stated that 95 percent of transactions from Swiss VASPs go to a top 20 crypto exchange such as Binance, BitMEX, or Bitfinex, the majority of which do not currently have a travel regulation solution in place. As a result, consumers of Swiss VASPs send and receive a lot of crypto using their own non-custodial wallets, commonly using AOPP, according to Betschart.
“It’s an intriguing side effect of enforcing the Swiss travel rule that more people are forced to use their own wallet,” Betschart said. “So it’s not that everyone is exchanging data, but rather that everyone is sending to their own wallet before they can, say, send assets to Binance.”