Introducing Chainalysis KYT, Multi-currency support and our Series A

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Blockchains are trust machines.

Blockchains create new ways for people to build trust among themselves and transact using cryptocurrencies. Cryptocurrencies have in turn inspired people to reimagine the financial machinery that powers world commerce. People are collecting land in virtual realities, conducting real-time payments for computation services and buying collectible cats on the internet. This is just the beginning of worldwide access to financial instruments. However, to realize this vision, trust in both the technology and between all relevant stakeholders is a requirement. Exchanges, token platforms and governance structures are some of the most important motors and cogs in these machines. The oil in these machines is the transparency that serves the most relevant data to every participant. Chainalysis produces the oil that gets these cogs turning.

With machines, it is not often that you get to look under the hood…

When we started Chainalysis in 2014, the connection between the cogs of the financial sector and Bitcoin were grinding together. There was a lot of interest inside banks to get involved in cryptocurrencies but there was no way to put compliance controls in place to meet regulatory obligations for Anti-Money Laundering. We built investigation software that could help cryptocurrency businesses explain to banks the source and destination of customers’ Bitcoin funds. This received massive traction over the last four years, permitting banks like Barclays to offer services to companies like Circle and Coinbase. However, as with oil, it can be refined further and reapplied.

To that end, today we are launching a new product called Chainalysis KYT (Know Your Transaction). Anti-Money Laundering compliance is centered around understanding the purpose behind a single transaction or a collection of transactions done by the same user. Chainalysis KYT provides real-time feedback on the underlying purpose of transactions and feeds that feedback into exchanges’ transaction processing engines. Compliance personnel use our dashboard to generate alerts on risky customers and export suspicious activity reports. We have opened KYT to a small group of early customers, and they have already seen a 20x improvement in the speed of account reviews. We’re excited to officially open this solution to exchanges and financial institutions everywhere, which represent the fastest growing segment of our business today.

2018 is also the year that we are introducing multi-currency support. At Chainalysis, we focus every effort on supporting the greatest economic outcomes for world commerce. Today that means looking beyond Bitcoin. To start, we are launching Bitcoin Cash as part of Reactor, our investigation software, for our law enforcement and government customers, and we plan to expand to at least 10 cryptocurrencies by the end of the year. We think of the different blockchains that power different cryptocurrencies as all part of the same machine. Both Reactor and Chainalysis KYT will feature all the cryptocurrencies that we support this year.

Lastly, we are proud to announce we have additional firepower to help Chainalysis continue to grow and build this future. We have raised a Series A of $16m from Benchmark and general partner Sarah Tavel is joining our board. Our expanding team of over 75 people across offices in New York, Washington D.C. and Copenhagen is working tirelessly behind the scenes to provide the necessary data that every stakeholder needs to bring us all closer to realizing the ultimate goal of empowering people to transact in ways that they could never have imagined.

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Learn more about KYT for Stablecoins & Token Issuers

Monitor transactions across the token’s full lifecycle, from issuance to redemption—and any transaction in between.

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How Transaction Monitoring Works at Chainalysis

One of the reasons Chainalysis KYT is so popular is that it uses global anti-money laundering (AML) standards common across regulatory bodies. We apply these standards when each transaction is screened.

Cryptocurrency businesses also need to understand the aggregate risk profile of each of their users. That’s why Chainalysis KYT provides a view of risk profiles at the user level, which reflects all of a user’s screened transactions. For example, if an organization has a user who receives funds from a darknet market, our software automatically flags that transaction as high risk. If the user sends funds to a regulated exchange, our software marks that transaction as low risk. And so on. Every screened transaction feeds into a user’s risk profile. Chainalysis KYT displays all user profiles, sortable by high, medium or low risk (using traffic light colors) for easy scanning.

We apply our risk methodology in real time to all users within an organization’s user base. This saves compliance teams from laborious, manual screening work. They can instead focus on developing comprehensive compliance programs. Organizations that work with us tell us this has enabled them to meet regulatory expectations and launch or grow their businesses.

Customizable risk level

We’re now giving our customers the ability to adjust the risk level of a category or a service. For example, not all jurisdictions around the world treat gambling the same way. In some countries, gambling is not considered a legitimate business activity and thus online gambling sites would be treated as high risk. In other countries, gambling is not considered illicit, which means properly licensed online gambling sites would be treated as low risk.

The ability to customize the risk level of categories and specific services means our customers can automate even more of their compliance workflows.

Organization-wide dashboard

One of the most useful facets of Chainalysis KYT is having a view of all users and their risk profiles directly accessible upon first logging in. It provides a visual alert of which users have high risk profiles and therefore require the most immediate attention. In keeping with the spirit of simplified visual cues, we have now launched a dashboard that summarizes key indicators at the total organization level. For example, organizations can now see what percentage of their user base is falling under high, medium or low risk. They will soon be able to see things like total exposure by category, or total transaction volume per day. These and other metrics will provide our customers additional understanding of their organization’s total exposure trends over time.

In-app chat

At Chainalysis, we strive to provide as much support to our customers as we can. To make it easier to interact with us, we added in-app chat to Chainalysis KYT. This allows our customers to send us questions or feedback without having to leave the environment. Our team typically responds within minutes.

Looking ahead

We know software is most valuable when it makes the lives of our customers easier and more productive. This means we’ll continue to add intuitive capabilities to our compliance products while increasing versatility for ongoing transaction monitoring. In the coming months, we will improve how transaction information is displayed. We will also boost our monitoring capabilities for other cryptocurrencies beyond Bitcoin. And we will deepen the integration with Chainalysis Reactor, which is used for enhanced due diligence and investigations.

The momentum around cryptocurrency compliance is only just starting and we look forward to continuing to offer software that builds trust in blockchains.

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