Ethereum firm ConsenSys has designed a tool to combat crypto-related fraud and illicit activity.
Key Takeaways
ConsenSys’ new compliance service allows users to detect and trace illicit cryptocurrency transactions.
Unlike competing services, Codefi Compliance mainly focuses on the Ethereum blockchain and its related tokens.
Regulatory compliance efforts are very controversial due to the fact that they reduce privacy.
Share this article
ConsenSys launched an Ethereum surveillance service to identify criminal activity, money laundering, and fraud. But this won’t harm people’s privacy, supposedly.
How It Works
Codefi Compliance allows users to analyze the Ethereum blockchain to detect criminal activity, money laundering, and fraud.
Rather than tracing Ethereum users through Know-Your-Customer (KYC) procedures, Codefi Compliance relies on Know-Your-Transaction strategies. This means that it analyzes data that already exists on Etherem’s public ledger, not data that users have provided. In theory, this allows Codefi Compliance to detect illicit activity without compromising the privacy of Ethereum’s end users.
Financial institutions and blockchain developers are most likely to find Codefi Compliance useful. One project that is already using the compliance system is the prediction market Sight.
Focusing on Ethereum
Unlike other competing services, Codefi Compliance provides a way to trace Ethereum transactions—not crypto transactions in general. According to ConsenSys, Ethereum proved challenging because it has a wide array of standards and a complex database, something that few other services have confronted.
Right now, Codefi Compliance includes support for over 280,000 Ethereum-based assets. It also supports Ethereum-based stablecoins, including DAI, Tether, TrueUSD, PaxosUSD, and USD Coin. Support for Bitcoin is also underway.
Other Compliance Services
Blockchain “regulatory compliance,” or surveillance, in other words, has become big business. The most notable company working in this area is Chainalysis, which has worked with exchanges like Binance and Paxful to enforce regulations. It has also provided services to the IRS since 2017, allowing the government body to detect tax-evading crypto investors.
Coinbase has also drawn attention because of its regulatory compliance efforts—first due to its 2019 acquisition of Neutrino and more recently due to its willingness to work with the IRS and DEA. Two other companies that provide similar regulatory compliance services are Elliptic and Ciphertrace.
Though these analytics companies could give legitimacy to crypto, they also run against the freedom from authority that it was designed to provide, making the new ConsenSys project rather controversial.
Share this article
The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
See full terms and conditions.
JPMorgan Considers Merging Ethereum-Based Quorum with ConsenSys
Second Round of ConsenSys Cuts Far Less Painful, Says Insider
Privacy-Enhancing Brave Browser May Not Be So Private After All
ConsenSys Launched an Ethereum Surveillance Service to Detect Criminal Activity
994