> For the complete documentation index, see [llms.txt](https://www.mica.wtf/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://www.mica.wtf/eu-level/q-and-a/eba-qa-7172-lightning-network-travel-rule.md). # Lightning Network: TFR/Travel Rule scope for CASPs | | | | --------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | **Authority** | EBA | | **Q\&A ID** | EBA\_QA\_2024\_7172 | | **Status** | Answer Published | | **Published** | 22 May 2026 | | **Legal basis** | WTR II [Articles 2(1)](/mica/title-i-subject-matter-scope-and-definitions-art.-1-3/article-2.md), [3](/mica/title-i-subject-matter-scope-and-definitions-art.-1-3/article-3.md); MiCA Article 3 | | **Source** | [EBA Q\&A](https://www.eba.europa.eu/single-rule-book-qa/qna/view/publicId/2024_7172) | ### Question Submitted by the Dutch Authority for the Financial Markets (AFM): Do Lightning Network (LN) transactions fall within the scope of the [Transfer of Funds](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/tofr/transfer-of-funds.md) Regulation (WTR II) and the EBA Travel Rule Guidelines (EBA/GL/2024/11)? ### Answer The Lightning Network (LN) is “a decentralized network using smart contract functionality in the blockchain to enable instant (micro)payments across a network of nodes. Two nodes can open a payment channel: a peer-to-peer connection through which bitcoin can be transacted”. Regulation (EU) 2013/1113 (TFR) applies to “transfers of crypto- assets, including transfers of crypto-assets executed by means of crypto-ATMs, where the [crypto-asset service provider](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/dora/crypto-asset-service-provider.md), or the [intermediary crypto-asset service provider](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/tofr/intermediary-crypto-asset-service-provider.md), of either the [originator](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/tofr/originator.md) or the [beneficiary](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/tofr/beneficiary.md) has its registered office in the Union” (article 2(1) TFR). Therefore, TFR only applies when at least one [crypto-asset service](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/crypto-asset-service.md) provider (CASP) is involved in the [transfer of crypto-assets](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/tofr/transfer-of-crypto-assets.md). The notions of “crypto-asset” and CASP are defined in articles 3(14) and 3(15) TFR by reference to Regulation (EU) 2023/1114 (MiCAR). The use of the LN does not seem to require the intermediation of CASPs for allowing transactions. As clarified in recital 22 MiCAR, [crypto-asset](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/crypto-asset.md) services provided in a fully decentralised manner without any intermediary do not fall within the scope of MiCAR, and consequently they don’t fall either in the scope of the TFR. However, the submitter explains that “several CASPs have already integrated the option to send bitcoin via lightning to/from their platform. Whereas regular Bitcoin transactions are in principle completely transparent, as they are recorded in the blockchain, this is different for Lightning transactions. Lightning transactions between two lightning nodes take place off-chain, only at the opening and closing of a channel is an on-chain transaction made that reflects the channel’s beginning and end balance. Moreover, indirect lightning transactions that span multiple channels are not traceable in the blockchain”. The operation of trading platforms by CASPs constitute a ‘[crypto-asset service](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/crypto-asset-service.md)’ for which CASPs must be authorised under MiCAR. This activity involves “the management of one or more multilateral systems, bringing together multiple third parties exchanging crypto-assets for [funds](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/funds.md) or for other crypto-assets”, as well as the “[exchange of crypto-assets for funds](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/exchange-of-crypto-assets-for-funds.md) and for other crypto-assets” and the “[execution of orders for crypto-assets on behalf of clients](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/execution-of-orders-for-crypto-assets-on-behalf-of-clients.md)”. Consequently, CASPs offering their customers the possibility to transfer crypto-assets with the use of the LN fall within the scope of MiCAR and TFR and should therefore comply with the travel rule requirements (i.e. before initiating or executing any [transfer of crypto-assets](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/tofr/transfer-of-crypto-assets.md), CASPs need to ensure that such transfers are accompanied by the relevant information on the [originator](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/tofr/originator.md) and the [beneficiary](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/tofr/beneficiary.md)). By contrast, the same use of the LN in mere peer to peer transactions not operated by CASPs, does not fall within the scope of MiCAR (recital 22 MiCAR), nor that of the TFR. Disclaimer: This answer clarifies provisions already contained in the applicable legislation. They do not extend in any way the rights and obligations deriving from such legislation, nor do they introduce any additional requirements for the concerned operators and competent authorities. The answers are merely intended to assist natural or legal persons, including competent authorities and Union institutions and bodies in clarifying the application or implementation of the relevant legal provisions. Only the Court of Justice of the European Union is competent to authoritatively interpret Union law. The views expressed in the internal Commission Decision cannot prejudge the position that the European Commission might take before the Union and national courts. *** **Source:** [EBA Single Rulebook Q\&A](https://www.eba.europa.eu/single-rule-book-qa/qna/view/publicId/2024_7172) ### Related * [execution of orders for crypto-assets on behalf of clients](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/execution-of-orders-for-crypto-assets-on-behalf-of-clients.md) — defined term used on this page * [intermediary crypto-asset service provider](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/tofr/intermediary-crypto-asset-service-provider.md) — defined term used on this page * [exchange of crypto-assets for funds](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/exchange-of-crypto-assets-for-funds.md) — defined term used on this page * [crypto-asset service provider](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/dora/crypto-asset-service-provider.md) — defined term used on this page * [crypto-asset service provider](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/crypto-asset-service-provider.md) — defined term used on this page * [crypto-asset service provider](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/tofr/crypto-asset-service-provider.md) — defined term used on this page * [transfer of crypto-assets](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/tofr/transfer-of-crypto-assets.md) — defined term used on this page * [crypto-asset service](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/crypto-asset-service.md) — defined term used on this page --- # Agent Instructions This documentation is published with GitBook. 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