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The partnership between Tether (USDT/USD) and digital identity startup Notabene aims to combat money laundering in cross-border transfers between exchanges. This is an effort on the part of the stablecoin issuer to become more compliant with global crypto guidelines, CoinDesk wrote. Notabene is a specialist provider of know-your-customer (KYC) infrastructure to crypto exchanges.

On Tuesday, Tether announced its trial partnership with Notabene to help it comply with FATF’s so-called travel rule. The travel rule mandates financial institutions to exchange KYC information for both senders and recipients of transfers.

Last year, it emerged that crypto companies had set a standard to deal with the FATF travel rule. The IVMS101 standard defines a uniform data model subject of exchange by virtual asset service providers (VASPs). The standard identifies anonymous and pseudonymous senders and recipients of transfers with the corresponding data “traveling” with each one.

FATF’s guidelines have come to encompass exchanges and stablecoin issuers. The partnership with Notabene comes against the backdrop of lawsuits and probes from regulators over Tether’s financial backing. Most notable, SEC stated it would not release records around the stablecoin issuer because they were collected for enforcement purposes. SEC stated:

We are withholding records that may be responsive to your request under 5 U.S.C. § 552(b)(7)(A). This exemption protects from disclosure records compiled for law enforcement purposes, the release of which could reasonably be expected to interfere with enforcement activities.

Last week, research company Hindenburg Research announced it was offering a bounty of up to $1 million for secret details regarding Tether’s reserves backing the stablecoin. Hindenburg expressed doubts about the stablecoin’s backing. On its part, Tether called the bounty a “pathetic bid for attention,” adding:

This is not the first time Hindenburg Research has orchestrated an apparent scheme in pursuit of profit. Nor will it be the last. Tether abhors and denounces their actions and transparent motives.

According to Leonardo Real, Tether Chief Compliance Officer, the purpose of the partnership is to improve products, transparency, and global regulatory compliance. He said in a press statement:

As pioneers of blockchain technology and leaders in transparency, we are dedicated to not only keeping up with new rules but helping shape them. Because the Travel Rule traditionally applies to financial institutions, we see this as an opportune moment to foster cooperation across traditional and digital channels in order to create better services for customers globally.  

The post Tether and Notabene partner on crypto regulation compliance appeared first on Invezz.

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