Why Decentralised Protocols, like TRP, Are No Longer Optional

In recent months, we’ve observed a notable spike in demand from VASPs for decentralised solutions. Curious about the cause, we dug deeper and concluded that this shift is likely driven by the global increase in economic and political disputes over sanctions, tariffs, and restrictions.

VASPs are starting to reconsider their reliance on SaaS solutions hosted in other jurisdictions, recognising that they are ultimately at the mercy of retaliatory measures between governments. This concern is not unfounded; SaaS providers can be forced to cut access to their services by government order, regardless of existing contracts.

What stood out to us in these conversations was the shared rationale: VASPs feared the abrupt loss of access would result in business interruptions and, hence, financial loss, and potential exposure of sensitive data, all of which would have a serious impact on their business continuity.

Below, we explain why decentralised protocols are no longer optional and why TRP is the ideal choice for VASPs. 

Why Decentralised Protocols Are the Way to Go

SaaS providers are subject to the laws and regulations of the countries where they operate. In times of geopolitical tension, governments may impose sanctions or restrictions that legally compel service providers to suspend or terminate access for entities in other regions. These decisions can be enforced without notice and override any existing commercial agreements. 

In effect, a VASP could suddenly lose access to critical tools, not due to any technical issue or contractual breach, but as a direct consequence of political developments in jurisdictions beyond their control.

Leaving these VASPs without a functioning solution and, therefore, having no way to continue business as usual.

Emphasising why a decentralised protocol like TRP is more valuable than ever: If VASPs wish to continue business unhindered in the current environment, a decentralised protocol is no longer optional. 

Protocol Decentralisation Explained 

A protocol is responsible for transferring data between counterparties within a Travel Rule solution; without a protocol, Travel Rule solutions cannot “communicate” with each other. There are various protocols on the market for Travel Rule solutions; however, TRP is the only decentralised option. 

When a protocol is decentralised, no entity or individual controls access; therefore, everyone has access to it at all times. This key feature of a decentralised protocol means VASPs will be able to transmit Travel Rule data to their counterparty regardless of their location and restrictions, as the protocol cannot simply be “switched off.” Nor can they be denied access to it, as there is no single point of control. 

Read 5 Ways To Tell if a Protocol Is Decentralised

Why TRP Is the Way Forward 

TRP is an open standard for exchanging digital-asset transfer-related data between VASPs as required by the Travel Rule.

As TRP is decentralised - nobody owns it - its users can never be denied access, meaning Travel Rule data can always be exchanged seamlessly, irrespective of global ongoings.  

With trust in centralised compliance tools and solutions being tested, VASPs should consider adopting an open standard like TRP. By employing the decentralised protocol, VASPs can ensure uninterrupted communication even in the event of restrictions.

Read How the Travel Rule Protocol (TRP) Benefits VASPs

Implement TRP today and transact seamlessly globally. 

Need help implementing TRP? Reach out to our tech team.