In the industry’s first, Chainalysis partners with Binance to facilitate compliance of cryptocurrency companies to Anti-Money Laundering Laws (AML). Incidences of cryptocurrencies abetting transfer of dirty money are one of the reasons regulators treat cryptocurrencies with suspicion. Interestingly, it is also one of the main reasons there is a lack of regulatory clarity in the crypto-verse.
Chainalysis is a technology company that develops markets and sells solutions that facilitate cryptocurrency compliance with existing laws. Further, the solutions offer investigation mechanisms through which entities like cryptocurrency exchanges can establish compliance status of cryptocurrencies.
Compliance at the Core of Chainalysis & Binance Partnership
According to a news release, the Chainalysis partners with Binance ahead of a global roll-out of such solutions. As a result, the solution will help Binance keep its platform away from dirty money. Binance is the largest cryptocurrency exchange by volume and it means a lot for it to be at the forefront of such an initiative.
Money laundering is a huge plague on the cryptocurrency sector. A recent report on the Wall Street Journal indicates that close to $100 million of dirty money passed through exchanges. Particularly, the report covers a period of almost five years. As per the WSJ, at least 46 exchanges facilitated the laundering of approximately $88.6M USD of illicit funds.
Interestingly, the report calls out ShapeShift through which most of the funds passed. ShapeShift is a multi-coin exchange which prides itself on the ability to provide services to users without registration. Particularly, the financial news outlet explains that most of the stolen funds went to a North Korean credit-card thief.
The cryptocurrency market, due to its decentralized nature, inherently calls for strong compliance regimes. As a result, there is minimal, if any, trust between cryptocurrency and regulators. Further, Jonathan Levin, Co-Founder and COO of Chainalysis, expects other cryptocurrency companies to follow Binance’s example.
“We expect many to follow Binance’s lead to build world-class AML compliance programs to satisfy regulators globally and build trust with major financial institutions,” says Levin.
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