Source and Purpose Transparency in Crypto Transfers: What Turkey’s Experience Teaches VASPs

The crypto industry has entered a new era of compliance—one that looks beyond “who” is sending or receiving virtual assets to instead ask “how” and “why.” Around the world, regulators are demanding that Virtual Asset Service Providers (VASPs) understand not just the identities behind crypto transfers, but their economic and behavioral context.

Turkey has taken a leading position in this shift, with the country’s Financial Crimes Investigation Board, MASAK, having issued one of Europe and the Middle East’s most detailed frameworks for applying the FATF Travel Rule.

This Compliance Guide for Crypto Asset Service Providers framework moves beyond data-sharing and sets broader expectations for how VASPs should monitor the source of crypto funds and the purpose behind transactions.

From who to how and why

Since FATF expanded the Travel Rule to include virtual assets in 2019, regulators have focused on making crypto transfers as transparent as traditional wire transactions. While implementations vary across jurisdictions, regulators generally require basic information like the sender’s and recipient’s names, wallet addresses, and identifying data. But that might no longer be enough to comply.

As the technological landscape shifts, authorities increasingly expect VASPs to understand the economic rationale behind transactions with source and purpose transparency. 

Source refers to where the crypto assets originated, while purpose refers to the broader context. In other words, VASPs need to understand why a transaction is taking place (is it an investment or payment?) and where the funds originated (are they from a salary, staking rewards, or previous transfers?).

These insights aren’t formal data fields, but sit at the heart of enhanced due diligence (EDD) and suspicious-transaction monitoring. In other words, compliance has evolved from data transmission to behavioral understanding, with VASPs increasingly required not only to know who their users are but what they are doing.

Suggested read: Enhanced Due Diligence (EDD)

Turkey’s implementation of the Travel Rule: the who

MASAK’s implementation of the Travel Rule is similar to other jurisdictions in that virtual asset transfers over a threshold must include names, wallet addresses, and at least one official identifier, such as a tax or national ID number, for both the sender and recipient. In Turkey’s case, this threshold is 15,000 TRY (approx. 360 USD).

This ensures that information about both parties remains intact throughout the transaction chain, and it’s clear who each party is. However, as mentioned earlier, it’s no longer enough to focus solely on the who, but the how and why.

How and why: Source and purpose as context for compliance

While MASAK doesn’t require a specific “purpose” field in every transaction message, its EDD obligations make it clear that understanding the purpose and nature of transactions is essential for VASPs. 

For example, in high-risk situations like dealing with politically exposed persons or clients from high-risk jurisdictions, VASPs are expected to collect extra information about the source of funds and the intended nature of the business relationship, apply tighter limits, and obtain senior management approval.

This aligns with FATF Recommendation 10, emphasizing that effective AML controls depend on context. VASPs should be able to explain why a customer is moving assets, and whether those actions align with their profile.

Understanding how assets are generated or acquired is critical, and VASPs should be able to trace the origin of funds to confirm they come from legitimate and verifiable activity. This emphasis on origin and purpose transforms the Travel Rule from a data-sharing exercise into a tool for proving the integrity of funds.

Source and purpose as opportunity

For many VASPs, compliance with these changing requirements demands significant technical investment. Not only do platforms need to implement compliant and secure messaging systems, validate data before transmission, maintain audit trails, and build clear escalation procedures for problematic transfers, but they also need to fully investigate source and purpose as part of EDD.

The growing emphasis on understanding the source and purpose of crypto activity isn’t just about satisfying regulators. It’s about reinforcing confidence in digital finance and establishing a payment ecosystem that’s traceable and that benefits customers, counterparties, and regulators alike. 

By providing robust transparency, compliant VASPs are at an exceptional advantage and can strengthen trust with banks, payment partners, and institutional investors who increasingly demand high compliance standards. 

What Turkey’s approach means for the future

Turkey’s detailed implementation of FATF’s Travel Rule positions it as one of the most advanced crypto-compliance environments in the region. While many countries are still debating how to apply source and purpose standards, MASAK has provided concrete operational rules that are shaping how local and international VASPs conduct business.

This model may soon echo across Europe and the Middle East as regulators push for greater transaction transparency. By emphasizing the “source” and “purpose” of funds, MASAK illustrates a future of crypto compliance that values context over technical conformity.

Compliance is not about ticking boxes. It’s about seeing the full story behind every transaction and building a more transparent digital-finance ecosystem in the process.