How Crypto Firms Can Overcome the Sunrise Issue in Travel Rule Compliance

As global regulators move toward full implementation of the Travel Rule, the crypto industry faces a critical compliance challenge: the Sunrise Issue. Much like the sun rising at different times across the world, the Travel Rule is not being adopted uniformly, creating a patchwork of regulatory requirements that vary from one jurisdiction to another.

In some regions, regulators have already enforced compliance, requiring Virtual Asset Service Providers (VASPs) to exchange customer information for transactions. In others, the rule remains in early development or has yet to be introduced. This uneven rollout leads to a fragmented regulatory landscape, where compliant VASPs must navigate interactions with counterparties that are not yet legally obligated to follow the same requirements.

For firms operating across borders, this inconsistency presents compliance risks, operational inefficiencies, and transaction delays, all of which can hinder business growth and expose firms to potential regulatory scrutiny. The challenge is clear:

How can compliant VASPs continue transacting with counterparties in unregulated regions while maintaining full compliance?

Why the Sunrise Issue Matters for VASPs

As with any emerging regulation, the Travel Rule is being implemented at different speeds across jurisdictions. Some countries have already enforced it, while others are still drafting or finalizing their regulatory frameworks.

According to the Financial Action Task Force (FATF), as of 2024, more than half of jurisdictions worldwide have yet to implement or enforce Travel Rule requirements (FATF, 2024). Today, there are 91 unregulated jurisdictions and 26 banned ones, adding to this regulatory fragmentation, which creates the "Sunrise Issue"—wherein compliance disparities create challenges for cross-border transactions and enforcement (Cambridge Centre for Alternative Finance, 2025)