U.S.-based cryptocurrency exchange Coinbase has rolled out Coinbase Know Your Transaction (KYT) to enable customers to safely and appropriately participate in the crypto economy. This new product is part of Coinbase Intelligence, which is growing suite of products dedicated to crypto compliance and to help secure the crypto economy from bad actors.
Coinbase is also updating its existing product, Coinbase Analytics, as a cornerstone of its compliance team’s day-to-day operations and is widely used by governments and law enforcement. It has also renamed Coinbase Analytics as Coinbase Tracer.
Coinbase Analytics was originally utilized as an internal tool to help leverage Coinbase’s first-party transactions data and strong analytics capabilities to mitigate risk on its own exchange as they scaled its business.
The new product and the update is part of Coinbase’s effort to address the compliance needs of financial institutions, crypto businesses, law enforcement agencies, and corporations new to crypto.
Coinbase KYT will help businesses and institutions better mitigate risk on their own platforms through the Coinbase API. Coinbase KYT is a transaction screening tool that financial institutions and crypto businesses can use to proactively manage risk based on Coinbase’s proprietary risk scoring system.
Coinbase KYT API will enable automation of real-time transaction monitoring for millions of transactions by generating risk scores for addresses. It will also deliver alerts to enable proactive risk management if there are changes to risk profiles.
The API can help easily configure rule engines and unique risk insights into existing third party case management tools. It will also help screen transactions for anti-terror financing and other AML-related flags at scale.
This action from Coinbase comes at a time when the New York State Department of Financial Services (NYDFS) has urged all licensed virtual currency business entities to use blockchain analytics to effectively address compliance requirements under the New York Banking Law and the New York Financial Services Law, as well as federal Bank Secrecy Act/anti-money laundering and Office of Foreign Assets Control requirements.
The NYDFS has urged such businesses to use blockchain analytics to augment Know Your Customer-related controls, conduct transaction monitoring of on-chain activity and conducting sanctions screening of on-chain activity.
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