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Key Takeaways

The Travel Rule is a regulatory standard that requires crypto platforms to collect and share certain details about crypto transactions. The goal is to comply with international anti-money laundering regulations.

Binance users may be required to verify the ownership of wallet addresses before sending crypto to (or receiving crypto from) certain platforms. 

The Satoshi Test is a verification method that simplifies Travel Rule compliance through a small cryptocurrency transfer. Once completed, it removes the need to repeatedly verify a wallet address for every deposit or withdrawal.

Introduction

The Travel Rule is an international regulatory requirement that affects how crypto is sent between platforms. It obligates crypto service providers to share specific transaction details to prevent money laundering and terrorism financing. While the rule promotes financial security, it can add complexity to everyday crypto transactions.

The Satoshi Test is a feature that simplifies how users comply with the Travel Rule when making cryptocurrency transactions. By allowing a small test transfer of BTC or other crypto to confirm recipient wallet ownership, the Satoshi Test makes the user experience more efficient and secure, especially when used in combination with Binance’s Address Management feature.

What Is the Travel Rule?

The Travel Rule, officially known as the Financial Action Task Force (FATF) Recommendation 16, is a global standard that applies to Virtual Asset Service Providers (VASPs). It mandates that when users transfer crypto assets above a certain threshold between VASPs, both the sender’s and recipient’s information 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 verifications.

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 is compliant to the Travel Rule. It allows users to verify a recipient’s wallet by first sending a small amount of cryptocurrency to ensure 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 (e.g., 0.00001 BTC) to the recipient.

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

Address verified: 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 for manual document uploads or back-and-forth verifications.

Why the Satoshi Test Matters

The Satoshi Test significantly improves user experience by:

Reducing friction: Simplifies the process of verifying recipient wallets.

Enhancing security: Ensures users are sending crypto to the correct wallet address.

Faster transactions: Once an address is verified, it’s much faster and easier for users to make new transfers.

Improving compliance: Helps Binance and its users stay aligned with regulatory requirements and expectations.

The Address Management Feature on Binance

The Address Management is a tool that allows Binance users to store and label wallet addresses, making future withdrawals much easier. Whitelisting addresses can also provide more security, reducing the risks of sending to the wrong recipient or typing the wrong address.

Depending on the case, Binance users can use the Address Management feature to verify wallet addresses via the Satoshi Test.

How to add a new address to the Address Management list

Log in to your Binance account and go to the Address Management page. You can also find it by navigating to [Account] → [Security] → [Withdrawal Whitelist].

Click [Add Address] to add a new withdrawal wallet address.

Add a label name to the address and fill in the information.

Depending on the case, you might be required to verify the address.

 Follow the instructions and complete the Satoshi Test (if requested).

For more information, please refer to the Binance FAQ.

Use Case Example

Imagine a user wants to send BTC from Binance to another exchange for the first time. Under Travel Rule compliance, the platform needs to verify the recipient’s wallet. Instead of going through a lengthy process, the user opts for the Satoshi Test, sending a tiny amount of BTC. Once the recipient confirms, the user completes the full transfer and adds the address to their Address Management for future use. The process will be seamless the next time they send BTC to the same address.

Closing Thoughts

The Satoshi Test is a practical and efficient solution that allows Binance users to comply with the Travel Rule and other international AML regulations. By verifying wallet ownership through a small crypto transfer, the Satoshi Test can help reduce delays while providing more convenience and security.

Further Reading

What Is Satoshi Test and Travel Rule Address Book Feature?

What Is Anti-Money Laundering (AML)?

Who Is Satoshi Nakamoto?

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Products mentioned in this article may not be available in your region. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.

Key Takeaways

The Travel Rule is a regulatory standard that requires crypto platforms to collect and share certain details about crypto transactions. The goal is to comply with international anti-money laundering regulations.

Binance users may be required to verify the ownership of wallet addresses before sending crypto to (or receiving crypto from) certain platforms. 

The Satoshi Test is a verification method that simplifies Travel Rule compliance through a small cryptocurrency transfer. Once completed, it removes the need to repeatedly verify a wallet address for every deposit or withdrawal.

Introduction

The Travel Rule is an international regulatory requirement that affects how crypto is sent between platforms. It obligates crypto service providers to share specific transaction details to prevent money laundering and terrorism financing. While the rule promotes financial security, it can add complexity to everyday crypto transactions.

The Satoshi Test is a feature that simplifies how users comply with the Travel Rule when making cryptocurrency transactions. By allowing a small test transfer of BTC or other crypto to confirm recipient wallet ownership, the Satoshi Test makes the user experience more efficient and secure, especially when used in combination with Binance’s Address Management feature.

What Is the Travel Rule?

The Travel Rule, officially known as the Financial Action Task Force (FATF) Recommendation 16, is a global standard that applies to Virtual Asset Service Providers (VASPs). It mandates that when users transfer crypto assets above a certain threshold between VASPs, both the sender’s and recipient’s information 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 verifications.

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 is compliant to the Travel Rule. It allows users to verify a recipient’s wallet by first sending a small amount of cryptocurrency to ensure 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 (e.g., 0.00001 BTC) to the recipient.

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

Address verified: 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 for manual document uploads or back-and-forth verifications.

Why the Satoshi Test Matters

The Satoshi Test significantly improves user experience by:

Reducing friction: Simplifies the process of verifying recipient wallets.

Enhancing security: Ensures users are sending crypto to the correct wallet address.

Faster transactions: Once an address is verified, it’s much faster and easier for users to make new transfers.

Improving compliance: Helps Binance and its users stay aligned with regulatory requirements and expectations.

The Address Management Feature on Binance

The Address Management is a tool that allows Binance users to store and label wallet addresses, making future withdrawals much easier. Whitelisting addresses can also provide more security, reducing the risks of sending to the wrong recipient or typing the wrong address.

Depending on the case, Binance users can use the Address Management feature to verify wallet addresses via the Satoshi Test.

How to add a new address to the Address Management list

Log in to your Binance account and go to the Address Management page. You can also find it by navigating to [Account] → [Security] → [Withdrawal Whitelist].

Click [Add Address] to add a new withdrawal wallet address.

Add a label name to the address and fill in the information.

Depending on the case, you might be required to verify the address.

 Follow the instructions and complete the Satoshi Test (if requested).

For more information, please refer to the Binance FAQ.

Use Case Example

Imagine a user wants to send BTC from Binance to another exchange for the first time. Under Travel Rule compliance, the platform needs to verify the recipient’s wallet. Instead of going through a lengthy process, the user opts for the Satoshi Test, sending a tiny amount of BTC. Once the recipient confirms, the user completes the full transfer and adds the address to their Address Management for future use. The process will be seamless the next time they send BTC to the same address.

Closing Thoughts

The Satoshi Test is a practical and efficient solution that allows Binance users to comply with the Travel Rule and other international AML regulations. By verifying wallet ownership through a small crypto transfer, the Satoshi Test can help reduce delays while providing more convenience and security.

Further Reading

What Is Satoshi Test and Travel Rule Address Book Feature?

What Is Anti-Money Laundering (AML)?

Who Is Satoshi Nakamoto?

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Products mentioned in this article may not be available in your region. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.