- Bank of New York Mellon has partnered with Chainalysis to enhance its crypto risk management
- Chainalysis software provides a plethora of services, including flagging high-risk transactions
Having added support for Bitcoin back in February last year, America’s oldest bank is now making further moves to enhance its custodial suite of services for crypto. BNY Mellon announced yesterday that it has partnered with blockchain software company Chainalysis to track its customer’s crypto transactions.
BNY Mellon, the largest custodian bank globally with $46.7 trillion in assets, sought the services of Chainalysis to track and analyse crypto products easily. The bank believes this will help it manage the legal risks that come with dealing in them.
Tracking customers’ crypto
As part of the collaboration, the blockchain data analysis firm will provide compliance software for risk management such as Kryptos, KYT (Know Your Transaction), and Reactor. Kryptos is software that enables the collection of complex data to determine the risk profile of industry participants, enabling informed decisions before interacting with a certain party.
KYT would be especially important as it automatically flags high-risk transactions. The software freezes deposits of ill-obtained funds and also blocks transactions directed towards sanctioned addresses.
Chainalysis clients can also leverage Reactor to link addresses to real-life entities.
An essential gateway into traditional finance
Even with these services, Chainalysis has often been at the receiving end of criticism over privacy concerns by some crypto quarters. Still, the firm plays an important role in pushing for the adoption of crypto into traditional financial institutions.
“Chainalysis has always believed that financial institutions are critical to the overall growth and success of the cryptocurrency industry,” Jonathan Levin, a co-founder at the firm, observed.
Speaking on the initiative, BNY Mellon’s Global Head of Custody, Caroline Butler, noted the importance of building trust as banks grow into the cryptocurrency sector.
“At BNY Mellon, we enter the digital asset market with the title of the most trusted asset service provider. Working with Chainalysis and other leading fintech companies, we are developing our capabilities in the growing cryptocurrency industry and reflecting this in our products,” she highlighted.
The Chainalysis collaboration is an indication of the increased ventures into crypto and blockchain niches by banks. Besides BNY Mellon, several other major banks, including JPMorgan & Chase, UBS Group, Standard Chartered, Goldman Sachs, and Morgan Stanley, have actively invested by participating in funding rounds for crypto and blockchain firms.