- Bank of New York Mellon has partnered with Chainalysis to improve its crypto risk management
- Chainalysis software provides a host of services, including marking high-risk transactions.
Having added support for Bitcoin in February of last year, America’s oldest bank is now taking further steps to enhance its suite of custody services for crypto. BNY Mellon ad yesterday that it has partnered with blockchain software firm Chainalysis to track its clients’ crypto transactions.
BNY Mellon, the world’s largest custodian bank with $46.7 trillion in assets, turned to Chainalysis services to easily track and analyze crypto products. The bank believes this will help it manage the legal risks involved in dealing with them.
Customer Crypto Tracking
As part of the collaboration, the blockchain data analytics firm will provide risk management compliance software such as Kryptos, KYT (Know Your Transaction), and Reactor. Kryptos is software that enables complex data collection to determine the risk profile of industry participants, allowing informed decisions to be made before engaging with a certain party.
KYT would be especially important as it automatically flags high-risk transactions. The software freezes deposits of ill-gotten funds and also blocks transactions directed to sanctioned addresses.
Chainalysis customers can also take advantage of Reactor to link addresses to real life entities.
An essential gateway to traditional finance
Even with these services, Chainalysis has often come under fire for privacy concerns from some crypto quarters. Still, the company plays an important role in driving the adoption of cryptocurrencies in traditional financial institutions.
“Chainalysis has always believed that financial institutions are critical to the growth and overall success of the cryptocurrency industry”, I observe Jonathan Levin, co-founder of the firm.
Speaking about the initiative, BNY Mellon Global Head of Custody Caroline Butler noted the importance of building trust as banks grow in the crypto space.
“At BNY Mellon, we enter the digital asset market with the title of most trusted asset service provider. By working with Chainalysis and other leading fintech companies, we are building our capabilities in the growing cryptocurrency industry and reflect that in our products,” said.
The Chainalysis collaboration is an indication of the rise of ventures into crypto and blockchain niches by banks. In addition to BNY Mellon, several other major banksincluding JPMorgan & Chase, UBS Group, Standard Chartered, Goldman Sachs, and Morgan Stanley, have actively invested by participating in funding rounds for cryptocurrency and blockchain companies.