KYB, KYT and the Travel Rule, in plain English

If you have looked at stablecoin services for your business, you have probably met three acronyms: KYB, KYT and the Travel Rule. They sound bureaucratic. In practice, they are what separates a service you can rely on from one that can disappear overnight.

KYB: know your business

KYB is the business version of KYC. Before a provider works with a company, it confirms the company exists, who owns and controls it (its beneficial owners), what it does, and where its money comes from. Expect to share registration documents, shareholder details and information about your expected activity. Good providers review this periodically, not just once.

KYT: know your transaction

Blockchains are public, which makes it possible to assess the risk of a wallet before funds are sent to it or accepted from it. KYT tools score wallets and transfers for exposure to sanctioned addresses, fraud, darknet markets and other illicit activity. Alerts are reviewed by a person, and funds linked to high-risk activity are not processed.

The Travel Rule

The Travel Rule comes from the international standards set by the Financial Action Task Force. It requires virtual-asset service providers to share originator and beneficiary information with each other when they transfer funds, much as banks do for wire transfers. It means the information about who is paying whom travels with the payment.

Why it matters to you

• Your counterparties' banks will ask how your stablecoin flows are controlled. These three answer that question.
• Screened flows are far less likely to be frozen or rejected downstream.
• A complete audit trail makes your own audits faster and cheaper.

At Metapac, all three are built into every service as standard. We work with businesses only, and we do not deal with sanctioned persons or jurisdictions.