Chainalysis is rolling out a global compliance solution for Tether (USDT), as the stablecoin’s issuer is now able to identify “high risk” transactions occurring on its network.
Tether to Track Stablecoin Network Activity With Chainalysis Suite Tether has partnered with Chainalysis to track possibly illicit activities… – https://t.co/2t4t6GFaTv #Qrcode #Decentralized #Blockchain #Income #Options #SMM #Capital #Transaction #Value #Information pic.twitter.com/xnJUl5vxTk — Smart Money Management (@SmartMoneyM) February 12, 2020
On February 12, it has been reported that the tracking is made possible by Chainalysis’ Know Your Transaction (KYT) suite, which allows the token issuers to monitor the activity of their assets. The real-time Anti-Money Laundering (AML) solution assists compliance efforts by tracking the entire chain of a token’s life, from issuance to redemption.
However, KYT provides both an API and a user interface to track suspicious activity, with various filtering tools.
It has been analyzed that regulators around the world recently started signaling that stablecoins deserve deeper scrutiny.
In October 2019, Kenneth Blanco, the Director of Financial Crimes Enforcement Network (FinCEN), noted that stablecoins are not exempt from complying with AML laws.
For the regulator’s purposes, stablecoin issuers are categorized as money services businesses (MSB) and have to adhere to the regulatory standards reserved for such companies.
Cryptocurrency exchanges are also categorized as MSBs and have gradually implemented stricter KYC and AML controls. But while compliance for an exchange is relatively straightforward, its scope is only for the money coming in and out, stablecoin issuers are potentially faced with the much harder task of tracking network activity.
Likewise, regulating the flow of money in and out of the stablecoin network is relatively simple, yet regulators around the world have often identified severe risk for stablecoin transactions.
Thus, tracking activity within the network itself may alleviate these concerns. While Tether cannot confiscate the “high risk” tokens directly, it can freeze the wallets that contain them.