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)
Key Challenges Stemming from the Sunrise Issue
Regulatory Disparities: VASPs in regulated jurisdictions must comply with strict identity and transaction reporting requirements, but their counterparties in unregulated regions may not have the systems or legal obligation to do so.
Operational Friction: Without a standardized global framework, VASPs must adopt manual workarounds to comply with Travel Rule requirements when dealing with non-compliant counterparties, leading to higher costs and inefficiencies.
Compliance Risks: Engaging with unregulated counterparties can expose VASPs to regulatory scrutiny, create due diligence challenges, and potentially limit access to banking partnerships.
The FATF has repeatedly urged jurisdictions to accelerate their implementation of the Travel Rule, warning that continued delays increase the risk of regulatory arbitrage, where bad actors take advantage of weak regulatory environments to move illicit funds (FATF, 2023).
With these risks in mind, VASPs need a scalable solution to onboard non-compliant counterparties and eliminate friction in cross-border transactions.
Bridging the Compliance Gap with Ospree
At Ospree, addressing the Sunrise Issue was a key priority in developing our Travel Rule compliance solutions. From the beginning, our focus has been on bridging the regulatory gap to prevent operational inefficiencies and compliance bottlenecks that could slow down transactions and create unnecessary friction in the industry. To tackle this, we designed a VASP-to-VASP onboarding process that enables compliant firms to onboard counterparties that are not yet Travel Rule-ready, ensuring an efficient, and compliant approach to global crypto transactions.
How It Works: Bringing Non-Compliant VASPs Up to Speed
✅ Request Counterparty Activation
From the Ospree dashboard, a VASP can initiate the process by sending an invite to a counterparty.
✅ Automated Onboarding Flow
The counterparty receives an invitation to register, with guided steps to align with compliance requirements.
✅ Review & Approval
Ospree verifies the counterparty’s details and grants access to the Travel Rule module upon approval.
✅ Real-Time Compliance Notifications
Once a counterparty is ready to securely exchange Travel Rule data, the inviting VASP receives instant confirmation.
A Defining Moment for Compliance in Crypto
With regulators ramping up enforcement, VASPs can no longer afford to take a reactive approach to compliance. The FATF’s 2024 update highlights the need for proactive onboarding of counterparties and the implementation of technological solutions to ensure Travel Rule compliance before regulatory deadlines take effect (FATF 2024). This marks a turning point for crypto firms, as their approach to the Sunrise Issue today will determine their ability to scale and operate in the long run.
“Compliance does not evolve in a straight line; it is shaped by regional political priorities, enforcement capabilities, and the pace of technological adoption,” said Javier Tamashiro, CEO of Ospree. “The challenge is not just about meeting current requirements but about future-proofing for the next wave of regulatory shifts. New compliance mandates will continue to emerge, and VASPs that build a flexible, technology-driven compliance approach now will have a significant advantage as regulations evolve.”
Crypto firms must decide whether to wait for complete regulatory clarity, which may never fully arrive, or embrace a compliance-first mindset that ensures operational resilience in multiple jurisdiction. The companies that thrive in the years ahead will not be those that merely meet today’s standards but those that transform compliance from a regulatory obligation into a strategic asset.
Compliance shouldn’t be a last-minute scramble. Firms that take action now, bridging regulatory gaps instead of avoiding them, will gain trust, expand their market access, and position themselves as leaders in the industry.
Reference List:
Cambridge Centre for Alternative Finance. (2025). Global cryptoasset regulatory landscape. Retrieved March 3, 2025, from https://ccaf.io/grid/da/map
Financial Action Task Force. (2024). Guidance on the implementation of the travel rule. FATF.
