Coinbase, the largest cryptocurrency exchange in the United States, has launched a series of new tools to help financial institutions with their crypto compliance procedures.
The company went on to say that it was particularly familiar with the difficulty of keeping up with worldwide standards and that it wanted to ensure that everyone could safely engage in the crypto business.
The new tools will handle the compliance requirements of “financial institutions, crypto firms, law enforcement agencies, and corporations new to crypto,” according to the press release.
Coinbase Know Your Transaction (KYT), a transaction screening tool, is included in the new set of technologies. Financial institutions and crypto enterprises would be able to “proactively manage risk based on our patented risk assessment algorithm,” according to the company.
To automate real-time transaction monitoring, the KYT service can be used as an API (application programming interface). The idea is to keep bad actors and bogus transactions at bay.
In practice, bad actors would use a service like Tornado Cash to mix or obfuscate transactions.
Users can also receive warnings to enable proactive risk management if their risk profiles change, as well as scan transactions for anti-money laundering flags.
The company’s analytics software has been renamed “Coinbase Tracer.” The technology, which has previously been utilized by governments and law enforcement organizations, now connects activity to real-world entities in order to depict crypto asset flow.
With risk scores and warnings, it may also be used to reduce fraud, explain counterparty risk, and help highlight AML problems. The organization came to the conclusion that it is on a quest to meet future compliance challenges.
Is Coinbase on its way to becoming a bank?
Regulators and lawmakers may applaud the additional features, but for the typical user, Coinbase is more becoming a traditional bank. Customers in Canada, Singapore, and Japan will be asked to submit additional details about their transactions, Coinbase announced in March.
Most banks set transaction limitations, demand a slew of personal data, report transactions to the government, charge exorbitant fees, and limit what their clients may do with their own money.
Centralized exchanges will have no choice but to follow this road as global regulators tighten the screws on the crypto industry, and Coinbase appears to be leading the way. On April 28, the company shares (COIN) hit an all-time low of $115.
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