-- First anti-money laundering compliance solution of its kind now available for stablecoins --
As seen in PR Newswire -- Chainalysis, the leading provider of cryptocurrency compliance and investigation solutions, today announced the launch of Chainalysis Know Your Transaction (KYT) for stablecoins, a real-time anti-money laundering (AML) compliance solution for monitoring stablecoins across every transaction through their full lifecycle, including issuance and redemption. Chainalysis KYT is the first solution of its kind to be applied to stablecoins, cryptocurrencies designed to minimize price volatility, usually by pegging or backing their value to other assets. The move signals the company’s commitment to providing market-leading compliance technology across a comprehensive suite of cryptocurrencies and tokens, and comes at a time when stablecoins are rapidly growing in popularity, with over $3 billion in market value.
“Chainalysis exists to build trust in cryptocurrencies among institutions and users,” said Jonathan Levin, COO, Chainalysis. “The repeated knock against cryptocurrency is its volatility, and trust in stablecoins could lead the way to increased commercial use. Chainalysis KYT for stablecoins further supports this vision by raising the bar for accountability and providing compliance teams with the technology they need to meet AML requirements.”
Traditionally, it was difficult for cryptocurrency businesses to enact proper AML controls, making it challenging to establish banking relationships and exposing them to regulatory and reputational risk. Chainalysis KYT enables them to monitor large volumes of cryptocurrency activity and identify high risk transactions on a continuous basis. Now stablecoin issuers can also meet higher AML compliance standards that support broader adoption.
Paxos Chief Operations Officer Andrew Chang said, “We created Paxos Standard (PAX) as a stable, digital currency that can be used for payment on transactions around the world. That’s why it was key for us to find a partner that could automate the process of screening for illicit activity. Chainalysis KYT is the first solution that can screen PAX transactions. Since PAX is the first regulated stablecoin, it's important that we operate responsibly, reduce risk exposure for our entire ecosystem, and maintain the integrity of our stablecoin."
“Working with Chainalysis helps us set a new standard for trust in the marketplace,” said Alex C. Levine, Chief Regulatory Officer and Head of Legal at TrustToken. “Chainalysis KYT not only provides important AML checks, but also strengthens our banking relationships, which ultimately enables us to be transparent with our customers about our holdings and show one-to-one parity with our TrueUSD token and the US dollar.”
Chainalysis KYT applies global AML standards to each transaction across all users within an organization’s user base. Stablecoin issuers can integrate with Chainalysis KYT via an API to immediately begin monitoring large volumes of activity and identify high risk transactions on an on-going basis. They can also leverage the user interface to quickly understand the risk profile of each stablecoin holder with the latest data and filter them by level of risk exposure to identify those that require the most immediate attention.
Chainalysis KYT is now available select for ERC-20 stablecoins, and will become available for additional tokens in the coming months.
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.
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.
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.
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.