Stablecoin giant Tether (USDT) is the latest crypto firm to adopt anti-money laundering (AML) tracking solutions from blockchain forensics firm Chainalysis.
Tether Partners with Chainalysis
Chainalysis announced the news of the deployment in a press release issued on Wednesday (February 12, 2020). According to the press statement, Tether will roll out the Chainalysis Know Your Transaction (KYT) tool as part of its drive towards greater AML compliance.
Now the Tether platform can monitor the stablecoin’s usage across its blockchain, enabling the real-time tracking of suspicious transactions.
With the Chainalysis KYT tool, Tether hopes to gain full-cycle monitoring capability of its stablecoin tokens from the moment of issuance to the point of redemption. The KYT tool can also potentially provide data on the risk profile of USDT token holders.
Thus, Tether will be able to monitor suspicious USDT movements across the different blockchain platforms that support the stablecoin. Commenting on the development, Tether’s chief technology officer Paolo Ardoino remarked:
Working with Chainalysis has allowed us to enhance our AML processes for all transactions involving the Tether token. This solution allows us to ensure a secure compliance program that fosters trust with regulators, law enforcement agencies and users.
With transaction monitoring tools often comes the possibility of user-privacy violations. According to Ardoino, Tether’s drive to ensure robust AML compliance will not come at the expense of exposing vital user information.
Tether has been subject to a lot of controversy with authorities in the U.S. accusing the company and its partner Bitfinex of an $850 million cover-up. Despite these legal troubles, USDT is still the largest stablecoin in the market with a total market capitalization north of $4.6 billion as at press time.
Regulators Want Greater Crypto Transactions Policing
Tether’s plan to use the Chainalysis KYT tool comes as regulators in different countries are announcing plans to ensure stricter crypto money laundering policing. Already, several crypto exchanges have tapped Chainalysis as part of their plans to ensure greater AML compliance while preserving user privacy.
In the U.S., the proposed 2021 budget sees the Secret Service receiving $2.4 billion in funding to among other things, monitor the use of cryptocurrency in money laundering and terrorist financing. The UK’s FCA is also keeping a close watch on crypto-related money laundering as well.
Crypto exchanges in the European Union (EU) are also expecting greater AML demands with the adoption of the fifth anti-money laundering directive (AMLD5).
What do you think about Tether monitoring its users? Let us know in the comments below.
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