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A blockchain analytics firm is urging crypto companies to make compliance a top priority as regulators increase requirements for virtual asset service providers.
Bitcoin’s bullish 2020 has sparked an influx of crypto companies with cutting-edge product features entering the market, along with new blockchains, tokens and DeFi protocols. All of these startups will have to meet the regulatory guidelines of the country where their business is based.
Crystal Blockchain says 2021 is shaping up to be an important year and is advising crypto services companies to introduce compliance measures that meet regulatory and due diligence requirements. This all comes after the Financial Action Task Force (FATF) released red flag indicators for virtual asset service providers in September.
These warning signs are designed to help VASPs identify illicit activity involving cryptocurrencies and include users with an unusual profile who suddenly engage in unusual activities such as large transactions or transfers split into many blocks just below the reporting thresholds.
Many jurisdictions and exchanges around the world have been slow to adopt the FATF guidelines, prompting some experts to warn that industry-wide compliance could be years away. This is partly due to the technical challenges involved in their implementation. However, there are tools that aim to make the process easier for VASPs.
Crystal says its cryptographic compliance software supports all mission-critical features for the current market, which means red flags can be identified quickly. It boasts proprietary algorithms that assign risk scores to transactions in real time, even before a block is confirmed by a network. This means that payments pending validation in a mempool can also be examined. The company’s product constantly monitors changes in regulation, investigates cryptographic hacks and scams, and automatically tracks international funds flows 24/7.
Keep VASPs informed
Virtual asset service providers using Crystal’s infrastructure are provided with a list of dozens of thousands of blacklisted addresses, helping to ensure that tainted cryptocurrencies and the accounts that store them are identified when they come into contact with compliant ecosystems .
According to the company, its tracking system for cryptocurrency investigations is a world first. This tool automatically detects cryptographic settlement points and identifies all transition addresses that have been used along the way. Crystal added that this feature is particularly useful for investigators attempting to do extensive research into where the stolen coins went and for those looking to find tangible links to real-world institutions.
The intelligence firm says its top priority has been providing a suite of products that are competitively priced and easy to use, despite the advanced features it offers. Constant improvements have been made to its instruments over the past two years. According to executives, Crystal Expert – its flagship subscription package – regularly receives praise for being easy to use, with a great deal of focus on removing unnecessary and clunky features.
“All of these tools, coupled with exceptional customer support, make Crystal Blockchain the analytics platform of choice for cryptographic compliance and risk management managers for service providers,” the company added.
Building a better industry
In October, Crystal said it now offers coverage in 70 countries for over 2,500 service providers. In addition to offering a service that can help VASPs meet the regulatory requirements set by the FATF, it enables European platforms to fulfill their obligations under the EU’s 5th Anti-Money Laundering Directive.
Crystal supports a wide range of cryptocurrencies and tokens, including Bitcoin, Bitcoin Cash, Tether, Litecoin, Ethereum, ERC-20 and ERC-721 and XRP tokens. Following a product update in late October, Crystal is capable of supporting more than 1,500 ERC-20 tokens. This includes over 60 well-known DeFi tokens, including yearn.finance, Uniswap, and Wrapped Bitcoin.
Crystal also regularly publishes reports shedding light on the current state of the crypto industry. In May, the company revealed that the dollar value of Bitcoin transferred between darknet entities and other organizations grew 65% in the first quarter of 2020 from the previous year.
The industry is maturing and regulatory requirements for VASPs are increasing. Financial institutions that fail to keep up with the latest requirements could end up falling behind.
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