Amid a tightening regulatory scene in crypto, blockchain analytics firm Chainalysis has joined up with digital asset exchange CoinField.
CoinField plans to use Chainalysis technology to help with its Anti-Money Laundering, or AML, practices, Chainalysis announced on Feb. 20.
As a result of tightening regulations over the past two years, Chainalysis has seen growth in its customer base, a representative from the company confirmed to Cointelegraph. “We've increased our customer count by 290% over the past two years, and new cryptocurrency exchange customers cite regulatory compliance as a top reason for adopting our technology,” she said.
Crypto leaves the Wild West behind
Media outlets have drawn correlations between the relatively new crypto industry and the Wild West — a niche industry running rogue far from the regulatory spotlight.
Over the past two years, however, governing bodies across the globe have cracked down on the industry, shutting down platforms, fining ICOs and adding requirements.
The European Union, or EU, in particular has tightened its leash on AML practices, introducing new regulations known as 5AMLD. In January, crypto derivatives exchange Deribit announced its departure for Panama, leaving the EU-regulated Netherlands and escaping 5AMLD.
Keeping up with the trend of regulatory expectations and policing, CoinField said it will harness Chainalysis’ Know-Your-Transaction, or KYT, technology to keep an eye out for money laundering and other illegalities.
The Chainalysis tech CoinField will use pertains to movements around numerous crypto assets, including Bitcoin, Litecoin, Ethereum and others.
Chainalysis fills a regulatory hole
As regulatory-focused headlines continue filling the web, one might ponder the necessity of the current global push for guidelines, especially in the crypto space.
“While illicit activity accounted for only 1.1% of cryptocurrency activity in 2019, that amounted to a total of $11.5 billion USD worth of cryptocurrency transactions, much of which were funds stolen via scams from innocent, vulnerable people,” the Chainalysis representative said, adding:
“The good news is, the very fact that we can quantify and investigate crypto crime so effectively demonstrates cryptocurrency’s inherent transparency. This kind of analysis would never be possible in fiat currency, but it is in cryptocurrency (with the right tools, of course) since every transaction goes into a public ledger. We hope to raise awareness of cryptocurrency’s built-in transparency, prompting reputational gains for the industry and, ultimately, more mainstream adoption.”
CoinField and Chainalysis both shoot for transparency
Chainalysis and CoinField aim to please regulators worldwide. "We both believe compliance is critical to the mainstream adoption of cryptocurrency, and we look forward to partnering with CoinField to promote the safe use of cryptocurrencies globally,” Chainalysis’ Chief Revenue Officer Jason Bonds said in the announcement.
In addition to employing Chainalysis’ KYT solution, CoinField said it plans to work with the blockchain analytics company’s Chainalysis Reactor as a way to dive deeper into perspicuous situations.
Chainalysis is a significant player in the crypto and blockchain space. The organization has provided significant data into a number of crypto-related thefts in recent years.
UPDATE Feb. 25, 17:35 UTC: This article has been updated with information Cointelegraph received from Chainalysis after initial publication.