Paxful, a United States-based peer-to-peer bitcoin marketplace, has partnered with blockchain forensic firm Chainalysis that will set new compliance standards for P2P exchanges.
Paxful made the announcement in press release published on its website on Monday, March 23. The exchange said that this partnership will set a new compliance benchmark for P2P cryptocurrency exchanges globally.
Paxful is already using Chainalysis KYT (Know Your Transaction) to monitor its platform’s cryptocurrency transactions in real-time and Chainalysis Reactor to build investigations when it detects suspicious activity. According to Paxful team, prior to partner with Paxful, Chainalysis considered P2P business as risky because they lacked the required the user data.
Paxful said that it had a new example for P2P exchanges by focusing on top-notch compliance and Know Your Customer (KYC) standard. This has led Chainalysis to change his attitude towards P2P exchanges and now the forensic firm is evaluating on a case-by-case basis before labelling them as risky, just as it does for other cryptocurrency exchanges.
Paxful further said:
“Through its work with Chainalysis, Paxful is well-equipped to develop new controls for customer protection, including blocking outgoing transactions to high-risk addresses linked to terror financing, sanctioned addresses, child abuse websites, and stolen credit card platforms. As Paxful continues to complete additional risk assessments in the coming months, their compliance capabilities will continue to expand.”
Chainalysis designs and develops anti-money laundering software for cryptocurrency businesses with a mission to build trusts on blockchain technology. The firm provides analysis and investigation tools to government agencies, exchanges, and financial institutions across 40 countries.
As the security has become top priority for the crypto businesses these days, Chainalysis KYT and Chainalysis Reactor are in high demand. As Crypto Economy reported, Bithumb has integrated these two software to be compliant with government new regulatory policy.
John Dempsey, vice presidents of products at Chainalysis, commented:
“Compliance is the key factor for establishing trust in cryptocurrency exchanges. By adopting a case-by-case approach to evaluating P2P venues, we are helping to broaden trust and transparency across the cryptocurrency ecosystem.”
Data privacy was always important and cryptocurrencies came into existence with privacy in mind. The team up of Paxful and Chainalysis could thus seem contrary to the crypto industry’s main feature of privacy and anonymity. But given the regulatory and the recommendation set forth by FATF, KYC and KYT measures have become necessary.
Lana Schwartzman, Chief Compliance Officer at Paxful, commented:
“At Paxful, compliance and security are top-of-mind as we work to keep the marketplace free from fraud and scammers. Partnering with Chainalysis was a great choice as we work to protect our users and instil in them the importance of regulation and compliance on P2P marketplaces like ours.”