FAQ

In the United States, where the term is most commonly used, a qualified custodian generally is a federal or state-chartered bank or savings association, certain trust companies, a registered broker-dealer, a registered futures commission merchant, or certain foreign financial institutions (“FFI”). According to the SEC, FFIs are “incorporated or organized under the laws of a country or jurisdiction other than the United States” and meet the following requirements under the new proposal:

1. The adviser and the SEC are able to enforce judgments, including civil monetary penalties, against the FFI;
2. The FFI is regulated by a foreign country’s government, an agency of a foreign country’s government, or a foreign financial regulatory authority as a banking institution, trust company, or other financial institution that customarily holds financial assets for its customers;
3. The FFI is required by law to comply with Anti-Money Laundering (AML) and related provisions similar to those of the Bank Secrecy Act (31 U.S.C. 5311, et seq.) and regulations thereunder;
4. The FFI holds financial assets for its customers in an account designed to protect such assets from creditors of the foreign financial institution in the event of the insolvency or failure of the foreign financial institution;
5. The FFI has the requisite financial strength to provide due care for client assets;
6. The FFI is required by law to implement practices, procedures, and internal controls designed to ensure the exercise of due care with respect to the safekeeping of client assets; and
7. The FFI is not operated for the purpose of evading the provisions of the proposed rule.

Finoa has extensive safeguards in place and complies fully with the requirements of German law, many of which are in line with the SEC’s requirements for qualified custodians. Read more about Finoa's qualifications as a custodian.  

Finoa Consensus Services is Finoa’s subsidiary focused on developing blockchain infrastructure and distributed validator technology that secures decentralized networks and maximizes institutional investors’ capital efficiency.

What is the Travel Rule?

The Travel Rule is a regulation developed at national and international level according to the Financial Action Task Force (FATF) Recommendation 16 in order to prevent money laundering and terrorist financing. It requires crypto or virtual asset service providers (CASP/VASP) such as Finoa to collect and share certain information about the originator and beneficiary of cryptocurrency transactions.

 

Why is the Travel Rule important?

The Travel Rule enhances the transparency and security of cryptocurrency transactions by ensuring that necessary information is exchanged between financial institutions. This helps prevent illicit activities and promotes trust in the cryptocurrency ecosystem.

 

When does the Travel Rule take effect?

The European Union has introduced new rules for transfers of crypto-assets through Regulation (EU) 2023/1113. This regulation implements the so-called "Travel Rule" and aims to combat money laundering and terrorist financing in the crypto-asset sector. It will take effect in Germany and in the rest of the European Union from December 30th 2024.

 

Jurisdictions and threshold

Finoa’s reference jurisdiction for applying the Travel Rule is Germany. Accordingly, all transfers of crypto assets are subject to the new reporting requirements, regardless of the amount transferred. For transfers above 1,000 EUR to a self-custodied wallet controlled by you, proof of ownership will be required. If you are not the owner, you will need to provide the necessary information about your counterparty.

 

How will the Travel Rule affect my transactions?

If a reporting obligation applies, you must provide information about the transfer's counterparty to initiate withdrawals or receive deposits. This information will be securely transmitted to the beneficiary's VASP (Virtual Asset Service Provider) to comply with the Travel Rule requirements. VASPs will then conduct comprehensive AML and sanctions checks before processing the transaction.

 

Who is Notabene, and how do they fit into the Travel Rule compliance?

Notabene is a Travel Rule protocol provider that facilitates the secure and compliant exchange of information between cryptocurrency service providers. We have partnered with Notabene to ensure seamless compliance with the Travel Rule regulations.

 

What measures are being taken to protect my privacy?

We prioritize your privacy and security. All information collected for Travel Rule compliance will be transmitted securely using advanced encryption methods. Notabene's protocol ensures that data is shared only with authorized entities and used solely for compliance purposes. For more information, please see Finoa’s Privacy Policy. 

To open an account, please fill in the contact form on our contact page. A member of our Sales Team will be in touch with you to initiate the process.

The account creation is dependent on the onboarding verification process and customer requirements.

The fee charged varies depending on the type of customer you are and the total value of assets you would like to custody. Please get in touch with our team to learn more. 

Storing your assets with a custodian allows you to protect your assets with best-in-class security and reduces the risk of you losing your keys or getting hacked. 

Finoa's custody solution offers bank-level security combined with immediate access to your digital assets. We ensure that your private keys are stored securely while giving you the freedom to deposit, stake, and withdraw your assets and grow your portfolio. 

Private keys for your assets are generated and stored in Hardware Security Modules (HSMs) that provide military-grade cold storage. Through the application of core banking technology to blockchain infrastructure, digital assets can be deposited, withdrawn, or staked within seconds. Our multi-signature functionality serves as an additional layer of security for your assets. 

Multi-signature is the process of validating a specific operation (such as a withdrawal) based on the confirmation from a predefined number of signatures. It acts as a security mechanism to ensure that the funds’ governance is respected. A multi-signature process splits the responsibility among multiple people, eliminating a single point of failure and making it substantially more difficult for funds to be compromised.

Staking means delegating your tokens into the blockchain network to act as a validator of transactions. By staking tokens, one helps in securing the network and in return, receives rewards for doing so.

Finoa's in-custody staking services support Polkadot (DOT), Oasis (ROSE), SKALE (SKL), Near (NEAR), Mina (MINA), Flow (FLOW), Audius (AUDIO), Axelar (AXL), Agoric (BLD), Kyve (KYVE), and more to come. Read an overview of our Proof-of-Stake assets.

Finoa offers a range of staking options, including:

• In-custody staking through the Finoa platform
• Delegated staking, via public validators 
• White-label staking nodes.

If you would like to deposit an asset for which we do not currently offer custody support, please get in touch with our team via the contact form. We are constantly adding more assets to meet our customers' needs.

Two-Factor Authentication is enabled in your Finoa account through the Finoa 2FA App. The latter works by cryptographically pairing your biometric data (Fingerprint or Face ID) on your smartphone with your Finoa account. 2FA serves as the means to enable a multi-signature functionality to your Finoa account.

For iPhone users, the Finoa App works on iPhones 6 and above. We highly recommend that you keep your iPhone up to date and install the recommended iOS updates regularly, to ensure the security of your iPhone.

Android users can access the Finoa App on devices running Android 9 or higher. These devices have the required security features, such as an integrated hardware security module (Secure Enclave, Trusted Execution Environment), as well as supporting biometric authentication methods (fingerprint or Face ID). However, as supported devices vary greatly in the Android ecosystem, Finoa cannot grant compatibility with our 2FA App for these.

Compatibility can only be fully assessed by trial, which is why Finoa encourages adopting an iPhone as the preferred device choice. As always, we highly recommend the following for the security of your device:

• Keep the software on your device up to date and install updates regularly. 
• Only install apps and use services from trusted sources.
• Secure your phone adequately for the event of theft. Set up a screen lock with a strong PIN or a biometric factor (e.g. fingerprint). 
• Report anything suspicious.

Disclaimer: note that there are exceptions to the device models supported by the Finoa App.