From November 17 onwards, United Kingdom-based users of Gemini will face strict new restrictions on deposits and withdrawals. This limits the types of tokens which can be transferred to ERC-20, ETH and BTC, and the counter-party of the transaction must be one of the 58 crypto-related companies that have signed up to the TRUST (Travel Rule Universal Solution Technology) scheme.
The decision, announced by the crypto-exchange on Tuesday, is to assure compliance with the 'Travel Rule' regulations that came into force in early September.
The 'Travel Rule' requires Virtual Asset Service Providers (VASPs) to collect enough identifying information from both parties of a transaction so that authorities can easily investigate it in case of suspected criminal activities.
Since adding crypto assets to the Financial Services and Market Bill in June 2023, the UK government has been on a legislation spree to ensure market stability and consumer protection for the country's 6.1 million crypto users. The Travel Rule follows recent laws regulating the marketing of digital assets and related services, stablecoins, and the seizure of virtual assets by authorities.
Such regulatory rigor in anticipating market abuse and restraining criminal and terrorist activities might turn out to be detrimental to the burgeoning crypto industry. By increasing the cost of compliance for firms and creating barriers to user adoption, the strict guidelines take a hammer to market dynamism.
To ensure legal conformity, Gemini will limit its UK users to exchanging funds with the other 58 crypto-related enterprises signed up to TRUST, which include Coinbase, Binance.US, Circle and BitGet.
The platform was born from a collaboration of several virtual asset providers to ensure its members "meet objective security, privacy, and compliance standards and adequately safeguard Travel Rule data."
TRUST has a fairly limited global reach thus far. New crypto companies can become members but the process, which implicates changes in the UX and customer services, takes a minimum of 3 to 6 months to complete.
Like several other jurisdictions, the United Kingdom's government has hopes of becoming a crypto hub. Improving market transparency and protecting consumers is necessary to ensure industry growth, especially in the financial sector.
Yet, with its strict regulatory approach, the UK government is forcing the egalitarian foundations of the industry to bend towards a principle of survival of the fittest and, with that, it might be crushing the innovation that inspired its crypto-hub aspirations in the first place.
