Does the Travel Rule apply to convertible virtual currency transfers?

Yes, for a money transmitter. FinCEN guidance treats a transmittal order involving convertible virtual currency (CVC) as an instruction to pay a determinable amount of money, so CVC transactions qualify as transmittals of funds and may fall within the Funds Travel Rule at $3,000 or more, or the CVC equivalent (FinCEN Guidance FIN-2019-G001; 31 CFR 1010.410(f)).

What the rule says: the duty to include information in the transmittal order falls only on a transmittor's financial institution and an intermediary financial institution located within the United States (31 CFR 1010.410(f)). The transmittor's institution includes the (f)(1) information when it sends the order (31 CFR 1010.410(f)(1)). An intermediary that accepts an order includes the (f)(2) information, if received from the sender, in the next order (31 CFR 1010.410(f)(2)). Paragraph (f) puts no such duty on the recipient's institution, and it does not apply to transmittals excepted by 31 CFR 1010.410(e)(6) or 31 CFR 1020.410(a)(6) (31 CFR 1010.410(f)(4)). The guidance says exchangers and administrators of CVC generally qualify as money transmitters, while users do not (FinCEN Guidance FIN-2019-G001).

In practice: first decide whether your activity makes you an exchanger or administrator, not a user. Then map your role in each flow. A nonbank institution acting as transmittor's, intermediary or recipient's institution is also subject to the recordkeeping duties of 31 CFR 1010.410(e) at $3,000 or more, including retaining the transmittal order when you are the recipient's institution (31 CFR 1010.410(e)(1)(iii)); banks follow 31 CFR 1020.410(a) instead. Test each transfer against the $3,000 trigger and the exceptions. The guidance says the required information must be obtained or provided before or at the time of the transmittal, however your CVC clearing and settlement is set up, and the parties need not use the same system or protocol for the value and the information.

For firms that are not money transmitters, check their own status under FinCEN's regulations.

Sources

1. FinCEN Guidance FIN-2019-G001 (May 9, 2019): https://www.fincen.gov/sites/default/files/2019-05/FinCEN%20Guidance%20CVC%20FINAL%20508.pdf
2. 31 CFR § 1010.410(f), (f)(1)-(2), (f)(4): https://www.law.cornell.edu/cfr/text/31/1010.410
3. 31 CFR 1010.410 (eCFR): https://www.ecfr.gov/current/title-31/section-1010.410

This answer is general information, not legal advice. Forteris is not a law firm.