Bridgetown, Barbados – Veriscope is proud to announce that members of its Governance Task Force have reviewed and approved the Terms of Reference and the Rules Framework during their inaugural virtual meeting in Q4 2020. These governance documents are outlined in the Veriscope onboarding model and define the parameters of interaction between key partners, stakeholders and other participants.
Veriscope is now ready to move forward to the next stage of implementing its solution for the FATF Travel Rule and global regulatory Compliance by Virtual Asset Service Providers (VASPs).
Veriscope Governance Overview
The Veriscope system provides a secure framework for sharing identification data for the various participants within the network for more transparent crypto transactions. It was designed as a smart contract mediated data coordination infrastructure, intended to provide a global discovery and validation ecosystem to solve regulatory guidance mandated through the Financial Action Task Force.
“We’ve been working with VASPs for several months and they all share the same concern: the protection of their users’ data. Hence, it was important to set out an onboarding model that defines the mode of operations and the requirement of each VASP in the exchange of information within the network”, said Chris Forrester of Shyft Network.
The onboarding model defines the types of information each participant must present to the network or receive from their counterparts so that they can transact comfortably. The development of a strong and inclusive governance framework is important to build trust among participants as it boosts their willingness to share information with each other.
The Veriscope onboarding model is divided into two parts: The Governance Task Force and The Rules Framework.
The Rules Framework represents the specific requirements for the VASPs wishing to participate in Veriscope. The Governance Task Force is a smaller group that has the responsibility for defining and maintaining the Rules Framework.
The Governance Task Force
The Task Force exercises its authority by designing the Rules Framework in such a manner that promotes trust and transparency among all participants on the network. Its members are drawn from different stakeholder groups within the network to ensure balance and objectivity in the design of the rules. They are a combination of key VASP participants from different geographical regions, external advisors in the compliance and AML fields, as well as infrastructure and technology experts. To ensure fairness in representation, a mix of small and large industry players are selected as members of the governance task force.
During the ratification, the task force had a total of 18 initial representatives, which include Aave, Binance, Bitfinex, Bitmex, Bitsonic, CoinHako, Genesis block, HashKey Pro, Hodlnaut, Huobi, Paycase Financial, Tether, TokoCrypto, Unocoin, among others.
The Task Force is chaired by Rick McDonell and Josée Nadeau, both Shyft Network Advisors, and former FATF executives. Shyft Network is acting as the Secretariat of the Task Force.
As the initiative advances, the Task Force is expected to expand to a maximum of 30 members, in addition to the Chairs. The members will also be rotated regularly to maintain balanced
representation and to include more VASPs as the composition of participants changes over time.
Veriscope Rules Framework
The Rules Framework is a set of policies and processes outlining what information VASPs must provide at onboarding as part of their verification process, and the rules of engagement related to VASPs verifying one another’s information held on the Discovery Layer. This Framework is designed and approved by the Governance Task Force. VASP participants on the network implement the Rules Framework.
The Rules Framework consists of four stages
A VASP can choose to proceed through just one or multiple of these four stages. However, it is in the interest of participating VASPs to move through as many of these stages as possible, as part of an effort to build trust on the network.
Where possible, the vision is to encourage decentralized decision making among participants, who will be able to view certain information related to their counterparty VASP and, in consideration with their own risk tolerance, agree whether they consent to enter into an information exchange with that correspondent VASP.
Ultimately, each member of the network will have their own policies around how much they need to know about a correspondent VASP in order to exchange information with them.
Looking forward
The ratification of the Veriscope onboarding model is obviously a huge step forwards in the journey towards compliance with financial regulation within the crypto industry. This Shyft Network initiative is gaining substantial traction and is testament to the importance of being proactive. The collaboration between participants drawn from different sectors of the blockchain industry is an indicator of the community’s resolve to take crypto to the mainstream.
Going forward, the Veriscope Task Force will establish standards that the crypto ecosystem can follow to ensure compliance with the regulatory environment. This will give blockchain-based products and services an equal standing to those in the mainstream market thus significantly boosting adoption. As things stand, compliance is the initial step that opens the door to the wider market. This onchain infrastructure, throughout 2021 will go on to support DeFi, DApps, Dex’s and other decentralized infrastructure, as a global whitelisting system.
The next phase of the Veriscope project will focus on enabling on-chain user signing as a solution for non-custodial address ownership and GDPR, as well as cross chain integrations with DeFi and Dex’s to enable an opt-in compliance tooling and liquidity pool infrastructure for digital assets globally.