The Travel Rule is a global regulatory requirement that service providers must share certain transaction information when transferring cryptocurrencies between platforms to prevent money laundering and terrorist financing. While the rule helps strengthen financial security, it also adds complexity to everyday cryptocurrency transactions.
To simplify this compliance process, Binance provides the Satoshi test feature, which allows users to confirm the ownership of the receiving wallet through a small test transfer of currencies such as BTC. Combined with Binance's address management function, the Satoshi test can significantly improve security and operational efficiency, and optimize the trading experience.
What is the Travel Rule?
The full name of the Travel Rule is the Financial Action Task Force (FATF) Recommendation No. 16, which is an international compliance standard for virtual asset service providers (VASPs). According to the rule, when users transfer crypto assets above a certain amount between different VASP platforms, service providers must collect and transmit relevant information about both parties to the transaction.
Includes:
- The name and wallet address of the sender;
- The name and wallet address of the receiver;
- Account number or unique transaction identifier.
Therefore, when a user attempts to transfer funds from Binance to another VASP that also complies with the Travel Rule, the platform needs to verify the ownership of the receiving address. This process is often manual and may involve address verification and delays.
What is the Satoshi test?
The Satoshi test is a feature designed to simplify the address verification process for users when sending crypto assets to other platforms that comply with the Travel Rule. By sending a small amount of cryptocurrency first, users can verify the ownership of the receiving wallet and ensure that the address does belong to the recipient.
How it works
Initiate a withdrawal request: When a user attempts to withdraw cryptocurrency to a wallet address that has not yet been verified, the system may prompt for a Satoshi test.
Perform a small test: The user sends a very small amount of cryptocurrency to the recipient (for example, 0.00001 BTC).
The recipient confirms the receipt: The recipient confirms the transaction ID and amount on the platform they use.
Address verification is successful: After the verification is completed, you can make a formal withdrawal, and the address will be marked as "verified" by the system for future use.
This verification method is especially suitable for the first transfer scenario, without manually uploading files or repeating verification.
Why is the Satoshi test important?
Satoshi testing significantly improves the user experience, as follows:
Simplify the process: Simplify the verification steps of the receiving wallet.
Strengthen security: Ensure that users send cryptocurrency to the correct wallet address.
Speed up transactions: After the address is verified, users can make subsequent transfers efficiently and conveniently.
Ensure compliance: Help Binance and users fulfill regulatory compliance obligations.
Binance Address Manager
Address Manager is a convenient tool provided by Binance that allows you to save and mark wallet addresses for quick withdrawals in the future. Whitelisting addresses can also effectively improve account security and reduce the risk of entering incorrect addresses or transferring assets to others.
In some cases, Binance users can also use the Address Manager feature to verify wallet addresses in Satoshi testing.
How to add a new address to the Address Manager list
Log in to your Binance account and go to the Address Management page. You can also access it through Account → Account Security → Withdrawal Whitelist.
Click [Add Address] to add a new withdrawal wallet address.
Add a note name to the address and fill in the relevant information.
You may be asked to complete address verification, depending on the situation.
Follow the instructions to complete the Satoshi test (if required).
Application scenario example
Take the first time a user sends BTC from Binance to another trading platform as an example. According to the compliance requirements of the travel rule, the platform needs to verify the ownership of the receiving wallet. To this end, users can choose to conduct a Satoshi test and send a small amount of BTC for verification first to avoid cumbersome manual processes. After the other party confirms the receipt, the user can make a formal transfer and add the address to [Address Management] for future use. Next time you send BTC to the same address, there is no need to repeat the verification, and the transfer process will be smoother and more efficient.
