What is the Travel Rule?

The Travel Rule, officially known as Recommendation 16 of the Financial Action Task Force (FATF), is a global standard that applies to Virtual Asset Service Providers (VASPs). It requires that when users transfer crypto assets above a certain threshold between VASPs, information about the sender and recipient must be collected and exchanged.

This includes:

Sender's name and wallet address.

Recipient's name and wallet address.

Account numbers or unique transaction identifiers.

As a result, when users attempt to send funds from Binance to another VASP that also complies with the Travel Rule, the platform must verify the recipient's address, often requiring manual steps, delays, or address checks.

What is the Satoshi Test?

The Satoshi Test is a feature designed to simplify the address verification process when sending crypto assets to another platform that complies with the Travel Rule. It allows users to verify a recipient's wallet by first sending a small amount of cryptocurrency to ensure that the recipient controls the wallet.

How it works

Initiate a withdrawal: When a user attempts to withdraw crypto to an unverified address, the system may prompt them to complete a Satoshi Test.

Send a small test amount: The user sends a very small amount of crypto (for example, 0.00001 BTC) to the recipient.

Recipient confirms receipt: The recipient confirms the amount and the transaction ID on their platform.

Verified address: Once confirmed, the full withdrawal can proceed, and the address is marked as verified for future use.

This verification method is especially useful for first-time transfers and avoids the need to upload documents manually or perform back-and-forth checks.