Many countries have started enforcing the implementation of the Travel Rule with the majority of South Korean trading platforms squeezed out of business for failure to implement required monitoring checks.
Digital currency compliance startup, Notabene has successfully completed its Series A funding round in which it raised $10.2 million. As reported by The Block, the funding round was co-led by Chicago-based, thesis-led venture investor Jump Capital, and Cambridge, Massachusetts-based F-Prime Capital.
The New York startup is seeing increased demand as several entities are aiming to comply with the recent regulatory guidance issued by the Financial Action Task Force (FATF). The funding round was preceded by a $1.8 million seed round led by Castle Island Ventures in November 2020, bringing the total funding the startup has received to $12 million to date.
Notabene’s business focus is centered on helping cryptocurrency-related firms or Virtual Assets Services Providers (VASPs) comply with the FATF’s travel rule. The rule stipulates that crypto services providers are required to “obtain, hold, and transmit required originator and beneficiary information.” Per the provisions of the travel rule, crypto exchanges will now be required to implement these provisions in order to secure licenses to operate.
“Really what it says is that if you’re a crypto exchange, and you are sending funds on behalf of your customer to another crypto exchange, you need to understand who is the ultimate beneficiary of that transaction,” Notabene CEO Pelle Braendgaard told The Block. These include withdrawals and deposits to exchanges, he said.
Notabene helps with the implementation of all required software integrations which the company’s boss said is a very difficult task.
“It’s really difficult — it’s not an easy thing to do,” Braendgaard said, adding that it will continue to expand its product team with the new funding.
The firm is responsible for the compliance integrations of Crypto.com, Paxful, and Luno, and it confirmed that its services are now in high demand amongst financial institutions as well. Braendgaard affirmed that the firm is “seeing a large influx of companies that are moving up their own internal travel rule compliance so they don’t lose transaction volume.”
Travel Rule Compliance to Become a Universal Requirement Soon
Many countries have started enforcing the implementation of the Travel Rule with the majority of South Korean trading platforms squeezed out of business for failure to implement required monitoring checks.
With the latest FATF guidance, the integration of the Travel Rule is billed to become a universal requirement for all outfits dealing with cash transactions or money transfers in any form. Braendgaard noted that by the second quarter of 2022, about 80% of trading platforms will be required to implement the travel rule. While in reality, protections against involvement in money laundering and terrorist financing remain the fundamental focus, the provisions of the travel rule are also billed to prevent some minor thefts that take place in the digital currency ecosystem.
With the projected demand that is billed to be witnessed in the near future as it relates to the need to meet global financial regulatory compliance, Notabene is positioned to be amongst the biggest beneficiaries in the space.
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