This is a plain-English overview, not legal advice. Check the rules that apply to you with your compliance adviser.
What the rules say about self-hosted wallets
- EU: the Transfer of Funds Regulation (Regulation (EU) 2023/1113, applying from 30 December 2024) requires crypto-asset service providers, for transfers of more than EUR 1,000 to or from a self-hosted address, to take adequate measures to assess whether the address is owned or controlled by their customer.
- UK: the Travel Rule has applied since 1 September 2023. For unhosted wallets, firms are expected to collect the relevant information and take a risk-based approach, including to whether the wallet belongs to their customer.
- Elsewhere: it follows the FATF's Recommendation 16; the detail differs by country.
Ways to establish ownership
| Method | Strength | Customer effort |
|---|---|---|
| Customer declares the wallet is theirs | Weak on its own | Very low |
| Screenshot of the wallet | Weak: easy to fake | Low |
| Micro-payment ("Satoshi test") | Good | Costs a network fee, slow, needs matching |
| Signed message from the wallet | Strong: only the key holder can sign | Low: free, takes seconds in the wallet |
A signed message is usually the best balance: cryptographic proof, no fee, no waiting. The hard part is making it work across every wallet and network your customers use, and keeping a record an auditor can check.
How VerifiedWallet helps
- Every major wallet and network: Bitcoin (including multisig), Ethereum and every EVM network, Safe and smart accounts, Solana, Tron, XRP, TON, Cardano, Cosmos, Sui, Aptos, Litecoin, Dogecoin and Bitcoin Cash.
- Identity tied to the wallet: the same verification can check the customer's identity, so the proof says who controls the wallet.
- AML screening of the wallet, with ongoing monitoring if you want it.
- An audit trail: each verification has a signed certificate and an evidence pack for auditors.
- Easy to add: an API, a "Verify with VerifiedWallet" button, or no-code Verification Links. Test for free at dev.verifiedwallet.io.
Sign once with your wallet: free, no transaction. We counter-sign it and give you a link anyone can verify. From $1.
More guides
How to check who owns a crypto wallet
Addresses don't carry names. Here's what does tell you who's behind one.
What is address poisoning, and how do you avoid it?
A lookalike address in your history, waiting for you to copy it. How to spot it.
Is this crypto address a scam? Check before you send
A one-minute checklist before any crypto payment you can't undo.
Crypto proof of funds: how to prove you hold it
A balance anyone can see, plus a signature only you can make.
Questions
Does the Travel Rule require proof of wallet ownership?
For EU crypto-asset service providers, transfers above EUR 1,000 to or from a self-hosted address require adequate measures to assess whether the customer owns or controls it, and a signed message is a common way to meet that. Other countries vary; check with your compliance adviser.
Is a signed message accepted as proof?
It's widely used because only the holder of the private key can produce it. Regulators expect a risk-based approach, so many firms combine it with identity verification and wallet screening.
Can our customers verify without leaving our app?
Yes. Use the popup embed or the OAuth-style button, and the customer signs in their own wallet; you get the result by webhook.