Home CryptoCurrency News Ethereum Development Studio ConsenSys Launches Token Compliance Service

Ethereum Development Studio ConsenSys Launches Token Compliance Service

It is becoming increasingly important for virtual asset service providers (VASPs) to comply with global AML/CFT regulations especially those set out by the FATF. This is because cryptocurrencies are becoming more popular with increasing adoption meaning that more people are now using them to enable value transfers.

Expectedly, this has attracted illegal use of the blockchain networks. However, the relatively short history of the blockchain technology means that there are few if any technologies in place already that can help the VASPs comply with these increasing regulations. So far, there are only three main crypto intelligence firms that provide third-party blockchain analytics and AML/CFT services. These are Chainalysis Inc., CipherTrace, and Elliptic.

Brooklyn New York-based Ethereum development studio ConsenSys aims to change that. This week, the firm announced the launch of its version of a blockchain sleuth service dubbed CodeFi Compliance. It will enable other companies to track and monitor the use of Ethereum-based tokens.

More than 280,000 tokens on the Ethereum network can be tracked and traced on the new platform including ERC-20, 721, 179, and 777-compliant tokens. The blockchain incubator will only support Ethereum tokens, expectedly with a focus towards decentralized finance applications.

Ethereum ERC20

In a press release on Monday, the company noted that the CodeFi Compliance product will employ three independent services – KYC (Know Your Customer), CFT (counter financing of terrorism), and KYT (Know Your Transactions). The last one is a novel way of tracking illicit funds and enabling platforms to identify funds related to illegal activities. The first two are part of the AML regulations which require businesses to demand the identification of their clients at the point of account creation.

“Historically, AML/CFT compliance has leveraged know-your-customer (KYC) guidelines, which require financial services institutions to make an effort to verify the identity, suitability, and risks associated with engaging with its customers,” ConsenSys said in its release.

“Codefi Compliance delivers know-your-transaction (KYT), which is critical for decentralized infrastructure and provides the next level in compliance analysis. KYT is privacy-preserving by evaluating behaviors of participating addresses rather than the identity of the participants. By providing KYT monitoring designed for blockchain-based assets with the highest quality on-chain data, Codefi Compliance provides AML checks to ensure transactions can remain anonymous while complying with regulations.”

In his statement, ConsenSys’ global Co-Head of CodeFi Lex Sokolin said that,

“Providing robust AML/CFT compliance for Ethereum-based digital assets is a keystone step in bringing the institutional financial industry to decentralized finance.” He also added that “Codefi Compliance is the next module in our product suite to eliminate complexity and risk in using DeFi, and help any business benefit from using digital assets.”

Omar Jones
Omar Jones
Senior news editor at Crypto Economy. Responsible for research and writing breaking news and featured reports. Introduced to crypto-economy in 2016, and now educating students and investors in the blockchain industry during their free time.
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