Trezor Backtracks on ‘Travel Rule’ App for Self-Hosted Crypto Wallets Amid Uproar

SatoshiLabs, the creator of the Trezor hardware wallet, has decided to shelve plans to adopt an automated protocol for proving ownership of a self-hosted wallet when withdrawing from an exchange in Switzerland (where it’s a regulatory requirement).

The U-turn from Trezor followed a Twitter storm from customers and privacy buffs.

Trezor announced Thursday it would integrate the Address Ownership Proof Protocol (AOPP), created by 21 Analytics, a Swiss fintech firm specializing in bringing crypto firms up to speed with anti-money laundering (AML) requirements set out by global financial crime watchdog, the Financial Action Task Force (FATF).

“Adopting AOPP was a small step toward improving usability for a portion of our customers with restricted access to bitcoin,” a SatoshiLabs spokesperson said Friday via email. “It was not a step taken due to any external pressure, regulatory or otherwise, and no similar implementations are planned.”

The reaction from the crypto community speaks to a growing tension when it comes to the steady march of AML regulations into the private reaches of self-hosted wallets.

It’s important to note that Switzerland (and Singapore for that matter) have gone beyond the FATF recommendations for data sharing among virtual asset service providers (VASPs) to include the identification of private wallets transacting with VASPs in those countries.

It is also worth noting that AOPP does not compromise users’ privacy, as the personal data being made automatically available are already known to the Swiss VASPs, 21 Analytics has pointed out. The application is meant to simplify the digital signing of data that corresponds to a specific destination address.

However, Crypto Twitter didn’t see it that way.

trezor, you are not welcome in cryptosociety

— Barmbarmbarm (@Barmbarmbarm1) January 28, 2022

“I didn’t expect this reaction from the Twitter Bitcoin Community. For the users affected by this regulation, AOPP is a great benefit, requiring user opt-in to perform any actions,” said 21 Analytics CEO Lucas Betschart in an email to CoinDesk, adding:

“Others seem to see it as a threat, opening the door for further measures. This is not the intent. I apologize for the confusion and welcome contributions to the open-source standard to help people withdraw their coins to their own wallets while not opening doors for limiting anyone’s freedom.”

Rival firms BlueWallet and Sparrow Wallet similarly backed down on AOPP after yesterday’s outcry.

Removing AOPP next release.

We appreciate all the feedback, thank you! 👊

— BlueWallet (@bluewalletio) January 27, 2022

Removing AOPP with the next release. https://t.co/YRwt1b7LWq

— Sparrow Wallet 🐦 (@SparrowWallet) January 27, 2022

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