Chainalysis have unveiled an anti-money laundering (AML) compliance solution for stablecoins called Know Your Transaction (KYT), according to a report. The product seeks to track stablecoins through every transaction, with the inclusion of redemption and issuance. Their KYT is the first solution of its kind to be applied to stablecoins, which with an increase in popularity, have more than $3 billion in market value at present.
“Chainalysis exists to build trust among institutions and users,” said Chainalysis Chief Operating Officer, Jonathan Levin. “The repeated knock against cryptocurrency is its volatility, and trust in stablecoins could lead the way to increased commercial use”.
It has been consistently difficult for cryptocurrency companies to enact legitimate AML controls, which meant that it could be tricky to establish banking relationships and risked exposing them to both regulatory and reputational uncertainty. KYT enables these companies to “monitor large volumes of cryptocurrency activity and identify high risk transactions on a continuous basis”.
The company asserts that with growing investment in cryptocurrencies, businesses without controls in place face regulatory action, reputation damage or exclusion from the financial system. These businesses need an automated way to assess money laundering risks so they can meet regulatory requirements and maintain relationships with key stakeholders.
Paxos And TrustToken Advocate Chainalysis Stablecoins Solution
Alex Levine, Chief Regulatory Officer and Head of Legal at TrustToken said: “It 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”.
Paxos Chief Operations Officer, Andrew Chang said: “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”. He continued, “We created PAX as a stable digital currency that can be used for transactions around the world. Chainalysis KYT is the first solution that can screen PAX transactions”.
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