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Transfer of Funds Rule

Definition ∞ The Transfer of Funds Rule specifies requirements for transmitting financial transaction information between institutions. This regulation mandates that financial institutions and virtual asset service providers collect and transmit specific originator and beneficiary data alongside transfers of funds, including digital assets. Its primary objective is to prevent money laundering and terrorist financing by ensuring traceability of transactions. Adherence to this rule enhances transparency and accountability within the global financial system.
Context ∞ The Financial Action Task Force’s (FATF) Travel Rule, a key component of the Transfer of Funds Rule, is driving significant compliance efforts within the digital asset sector globally. Service providers are actively developing technical solutions to meet these data sharing obligations without compromising user privacy. The ongoing debate centers on the practical implementation challenges and the necessity of international coordination for effective enforcement.

The central white sphere, a core protocol node, is surrounded by radiating blue cryptographic primitives, symbolizing encrypted data units or token shards. A smooth white orbital band represents the foundational consensus mechanism governing the distributed ledger. Thin, dark network channels extend, depicting inter-chain communication pathways linking to blurred decentralized nodes within the expansive DLT framework. Small metallic spheres denote active validators, contributing to network security and transaction finality, illustrating complex blockchain network topology.

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European Union Finalizes MiCA Mandating Comprehensive Crypto Asset Service Provider Licensing

MiCA's full application mandates a unified EU licensing framework for CASPs, fundamentally shifting compliance from national rules to a single bloc-wide standard.