The Counterparty Challenge in Institutional Crypto

**Executive summary:** This report describes the ‘counterparty problem’ in crypto—wallet addresses carry no inherent identity—and explains how the Travel Rule only partially addresses the issue when self-hosted wallets are involved. It reviews verification methods (cryptographic signatures, micro-transfer or 'Satoshi' tests, and self-declaration), regulatory trends toward cryptographic attestation, and recommends a four-layer institutional framework (proof of control, real-time address screening, entity-level risk scoring, and continuous monitoring) to deliver robust counterparty due diligence; it also references CertiK's Skynet Enterprise as an example solution.