The crypto industry has spent the last year panicking about the wrong thing. Scroll through any thread on the Travel Rule and you'll find the same fear: the EU is coming for your self-hosted wallet. What you won't find is anyone reading the actual regulation closely enough to notice that exchanges are the ones under the microscope, not wallets.
The Travel Rule requires crypto exchanges and other regulated crypto providers to share identifying information with each other whenever they handle a transfer. Your name, wallet or account identifier, physical address or date of birth. Most people have heard about the €1,000 threshold for self-hosted wallets. Far fewer realise there's no threshold at all when both sides are regulated exchanges.
Under the EU's Transfer of Funds Regulation, every transfer between regulated crypto providers is covered regardless of value. A €50 transfer carries the same requirements as a €50,000 one. The information travels with the transfer between the providers so it can be traced if needed.
Transfers to self-hosted wallets work differently. Send crypto from an exchange to a wallet you control, and the exchange doesn't share Travel Rule data with another provider because there isn't one on the other end. Below €1,000, that's it. Above €1,000, the exchange has to verify you own or control the receiving wallet. How that works depends on the exchange: signing a message, completing a small verification transfer, or another approved method. In higher-risk situations, the exchange may ask for additional checks even below that threshold.
Sending to someone else's self-hosted wallet is another question entirely. You can't prove you control an address that isn't yours, so the exchange can't run the standard ownership check. Instead it falls back on its own anti-money-laundering procedures and decides whether the transfer meets its compliance requirements. Some exchanges allow it with extra checks. Others don't support it at all.
So the common assumption is backwards. Exchange-to-exchange transfers are subject to full information sharing from the first euro. Transfers to your own wallet follow a different set of rules, ones that focus on the relationship between you and your exchange, not data sharing between two providers.
None of this is a reason to panic about self-custody. If you want to understand where the reporting actually happens, look at the exchanges, not the wallets.