Chainalysis Launches Anti-Money Laundering (AML) Compliance solution for Stablecoins

Chainalysis announced a new solution called Know Your Transaction (KYT) for stablecoins.

The newly announced KYT solution is a real-time anti-money laundering (AML) compliance solution. It monitors stablecoins across every transaction through their full lifecycle, including issuance and redemption.

Chainalysis claimed that its KYT solution is First anti-money laundering compliance solution of its kind now available for stablecoins.

Stablecoins in Brief

As we know USDT was the only stablecoins initially. However, in last year, stablecoins have grown in popularity due to cryptocurrency market volatility. These stablecoins are generally pegged against fiat currency like USD, EUR, CNY or JPY and sometimes against gold or oil. The major stablecoins include the US Tether(USDT), Gemini Dollar (GUSD), MakerDao (DAI), Paxos Standard Token (PAX) and TrueUSD (TUSD). The overall market of stablecoins stands around the US $3 billion.

In last November 2018, CobinHood, Binance, Liquid, Bitrex, and Coinfield cryptocurrency exchanges have listed stablecoins. In fact Japan’s Mizuho Financial group plans to launch its stablecoin for remittances and payments in March 2019.

The Problem and KYT for Stablecoins solution

Cryptocurrency market is struggling to meet the regulatory demands of governments with AML policies. This hurdle creates problems while working with banks and meeting compliance requirements in respective countries. According to the announcement, "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."

Chainalysis KYT helps in applying global AML standards to each stablecoin transaction within an organization's user base. Further, Chainalysis API (s) can also be leveraged and integrated with stablecoins to monitor large transactions and volumes on a continuous basis. The KYT solution also helps in the understanding user risk profile of each stablecoin holder and quickly help in identifying the transaction that requires immediate attention.

Executive Opinion

Chief Operating Officer (COO), Chainalysis, Jonathan Levin, said, "Chainalysis exists to build trust in cryptocurrencies among institutions and users. 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."

Chief Regulatory Officer and Head of Legal at TrustToken, Alex C. Levine, said, "Working with Chainalysis helps us set a new standard for trust in the marketplace. 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."

Initially, only a few ERC-20 compatible stablecoins are supported. However, the announcement did not disclose a list of supported stablecoins.