A Halloween Special... The Travel Rule vs GDPR: A compliance collision!!!

The FATF Travel Rule forces Virtual Asset Service Providers (VASPs), exchanges, payment service providers, and even banks to share sender and receiver data with every crypto transfer. It’s designed to fight financial crime but in doing so, it breaks one of the most important frameworks in modern regulation: GDPR. By pushing personal data across borders without user control or a lawful basis, the Travel Rule effectively makes institutions compliant with one law while breaching another. Oops. Under FATF Recommendation 16, VASPs are required to transmit:

• Sender and recipient names

• Wallet identifiers

• Address or national ID data

  
  

This information ‘travels’ through multiple intermediaries, often outside the EU, exposing Personally Identifiable Information (PII) to jurisdictions with weaker privacy laws. That’s where the problem lies. It directly conflicts with key GDPR principles:

• Article 5(1)(c) – Data minimisation

• Article 6 – Lawful basis for processing

• Article 44 – Restrictions on cross-border transfers

• Article 25 – Privacy by design

  
  

In short, FATF compliance currently means non-GDPR compliance. While some VASPs have implemented Travel Rule solutions, adoption remains low, only around 30% are actually compliant. Maybe GDPR conflicts aren’t the real reason, but they certainly make for a convenient argument. Most Travel Rule systems (like TRISA, TRUST, and Shyft) still exchange raw customer data through semi-centralised networks, leaving institutions exposed to:

• PII leakage and duplication

• Non-compliant international data transfers

• Loss of data-subject rights

• Potential GDPR fines and reputational risk

  
  

Here’s the irony, the very technology that DeFi runs on is the one that can fix this mess. FATF’s approach to the Travel Rule largely ignores the power of tokenisation and its ability to enable encrypted, privacy-preserving data exchange. BlockTravel, developed by Block Infrastructure, doesn’t make that mistake. BlockTravel (along with all other Block Infrastructure products) embeds privacy-preserving compliance directly into each transaction. Instead of broadcasting personal data, it uses:

• Zero-knowledge screening – validate compliance without exposing PII

• Selective disclosure – only share what’s strictly required

• Encrypted KYC tokens – verifiable, anonymised compliance proof

  
  

This means counterparties can confirm AML and sanctions requirements without ever revealing raw personal data keeping every transaction FATF-aligned and GDPR-compliant. The Travel Rule was built for transparency, not privacy. BlockTravel brings both together, enabling institutions to meet global AML standards and protect user data through atomic compliance and settlement. In a world where regulation demands openness and privacy at the same time, BlockTravel delivers the balance the industry has been waiting for.

Now that I’ve untangled this regulatory spaghetti bowl, do I get a medal, or at least a pint?

European Data Protection Board and Financial Action Task Force, if you’re reading this, I’m quite partial to a good craft beer. So if you fancy saying thanks for solving your little GDPR-meets-Travel-Rule standoff, just pop a six-pack in the post. I promise to toast to compliance and data minimisation in your honour. 🍺