Binance, the world’s largest Bitcoin exchange by market capitalization, is planning measures against money laundering with crypto currencies. By integrating the Chainalysis KYT software, the exchange is expanding its compliance with classic financial market regulations.
Binance and Chainalysis fight against Bitcoin formula
As Chainalysis announced yesterday, Thursday, 18 October, the company is now working with the Binance crypto exchange. Binance uses the Chainalysis software KYT (“Know Your Transaction”) to establish compliance in the area of money laundering. According to the company, KYT is Bitcoin formula software specially developed for the transfer of money laundering activities. Chainalysis on Medium describes how it works as follows:
“Chainalysis KYT provides real-time feedback on the underlying purpose of transactions and feeds this feedback into the stock exchange transaction processing engine. Compliance staff use our dashboard to generate high-risk customer alerts and export suspicious activity reports.”
Chainalysis KYT is based on a set of proprietary algorithms that use a number of open source resources to identify and report suspicious patterns in the transaction behavior of monitored wallets.
Since this year, the tool has also included the monitoring of BCH in addition to the analysis of BTC.
Binance’s expansion efforts in Africa
We have already reported in detail on Binance’s expansion efforts in Africa. The cooperation with Chainalysis must therefore be seen in the light of the exchange’s growth intentions. These are accompanied by strict regulations, which the exchange must comply with. Binance CFO Wei Zhou adds:
“By working with Chainalysis, we can build a compliance program that will enable the next phase of our growth. Our vision is to provide the infrastructure for a blockchain ecosystem and promote the freedom of money worldwide, while complying with the legal requirements in the countries where we operate”.
It is precisely these legal requirements that may have led Binance to partner with Chainalysis. The tool helps the Exchanges to comply with the legal know-your-customer and anti-money laundering regulations. Through this kind of compliance, stock exchanges could ultimately get hold of their much longed-for bank licenses.