PayPal has joined Coinbase’s Travel Rule Universal Solution Technology (Trust) network, which aims to “protect the security and privacy” of customers while adhering to the travel rule of the banking industry.
The Trust Network was launched in February by 18 leading virtual asset service providers (VASPs), including Kraken and Robinhood. The addition of PayPal brings membership to 38.
Under travel rules in the US, VASPs are legally required to pass on specific information relating to customer fund transfers from one financial institution to another for amounts in excess of $1,000.
Coinbase’s Trust Network discloses essential data while protecting user privacy at the same time. It will avoid using a central store of user data and ensure that its members are trustworthy through compliance and risk management solutions provided by risk management firm Exiger.
PayPal move is seen as validation for the industry
Coinbase is one of the most popular cryptocurrency exchanges in the world and is working hard to make itself compliant with various regulations.
According to a statement from Coinbase, PayPal serves 400 million consumers worldwide, and entering the digital currency space will help validate the industry and open even more doors for cryptocurrency adoption.
The development comes after the payments firm allowed users to transfer, send and receive digital assets between PayPal and other wallets and exchanges in June.
PayPal initially forayed into the digital assets sector in October 2020, but then users were restricted to buying and selling crypto on the company’s own platform.
Coinbase faces lawsuit over alleged unauthorized asset transfer
Meanwhile, investors owning Coinbase wallets and accounts have filed a class action complaint claiming that Coinbase violated its user agreement by locking customers out of their accounts and authorizing the transfer of assets without consent. .
According to the suit, “Coinbase locks its customers out of their accounts and funds for an inappropriate amount of time, or permanently.”
Due to the extreme price swings of cryptocurrencies, a 40% drop in 24 hours is not uncommon, with the inability to access an account to sell, buy or trade cryptocurrency resulting in substantial financial losses for “account holders”.
Because of a lawsuit filed against Coinbase by its investors, who accuse the firm of failing to prevent losses from unauthorized transactions and of failing to pursue multiple legal actions in court.
This has prompted the exchange to seek Securities and Exchange Commission (SEC) guidance on security classification.
Role of the Securities and Exchange Commission
The SEC has not positively identified which tokens qualify as securities, and therefore require registration with the authority. Current chairman Gary Gensler argues that this lack of identity also occurs in other markets.