On-chain investigator ZachXBT has offered practical guidance to European crypto users struggling with exchange transfers as stricter EU regulations continue to affect deposits and withdrawals on centralized trading platforms.
The comments came after a user on X complained that moving funds between exchanges through Bybit and its European entity had become increasingly difficult. Responding to the post on July 2, ZachXBT advised users to first send assets to a non-custodial wallet they control before transferring them to another exchange or another person.
Always deposit from a noncustodial address you control and withdraw to a noncustodial address you control for CEXs nowadays & then transfer to another CEX or friend after.
I have yet to see a single example where the crypto travel rule has solved or prevented laundering….
— ZachXBT (@zachxbt) July 2, 2026
He said users should always deposit from and withdraw to a self-custody wallet before making transfers to another centralized exchange. ZachXBT also questioned the effectiveness of the Crypto Travel Rule, saying he has not seen evidence that it has stopped or prevented money laundering.
Why are crypto transfers becoming more difficult in Europe?
The growing challenges are linked to the European Union’s implementation of the Transfer of Funds Regulation (TFR), which fully introduced the Crypto Travel Rule for crypto service providers from December 2024.
Under the rules, exchanges must collect and share information about both the sender and recipient of crypto transactions. The requirements apply to most transfers and are designed to strengthen anti-money laundering and counter-terrorism financing measures.
As a result, exchanges including Bybit have introduced additional verification procedures for deposits and withdrawals in affected jurisdictions. Users may be asked to prove ownership of self-custody wallets, while some transactions can remain pending until compliance checks are completed.
Self-custody wallets become a practical option
ZachXBT’s suggested approach involves using a self-custody wallet, such as a software or hardware wallet, as an intermediate step before sending funds to another centralized exchange.
While this method may help simplify transfers between platforms, users can still face additional verification requests, especially for larger transactions or transfers flagged by exchange risk systems.
Bybit has also been restructuring its European operations to align with the EU’s regulatory framework, including migrating eligible users to its licensed regional platform. Bybit EU also launched a series of new stablecoin initiatives featuring USDC and EURC to promote regulated digital asset usage across the European Economic Area.
Travel Rule continues to divide the crypto industry
The Crypto Travel Rule remains one of the most debated regulations in the digital asset industry.
Supporters argue that the framework improves transparency by allowing transaction information to accompany crypto transfers, making it easier for authorities to investigate suspicious activity.
Critics, however, say the rules increase compliance costs, slow down transactions and create unnecessary friction for everyday users without clear public evidence that the measures have significantly reduced illicit crypto activity.
As Europe continues implementing MiCA and Travel Rule requirements, exchanges and users are expected to face stricter compliance checks while adapting to the region’s evolving crypto regulations.
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