Overview
KEY TAKEAWAYS:
As a recap: This session focused on compliance and cybersecurity surrounding cryptocurrency and non-fungible tokens (NFTs) and featured Chainalysis, Inc.’s Director of Research Kim Grauer as a guest. Chainalysis creates transparency in the virtual space by providing blockchain analysis data to cryptocurrency businesses, financial institutions and governments. Harvesting this blockchain data allows both companies and law enforcement to ensure they serve the public within the bounds of the law by monitoring transactions for compliance with anti-money laundering (AML)/know your customer (KYC) requirements, tracking fund sources involved in financial crimes and providing market data and intelligence. Kim cautioned that this transparency is a double-edged sword for the industry. While the digitalization of this data means that more of the “bad actors” associated with the blockchain are brought to light, it also forces the industry to cross a higher hurdle in order to achieve legitimacy that is not seen with the US dollar.
As it pertains to NFTs, there is currently a push for such exchanges to ensure they comply with the various AML/KYC requirements that are applicable to cryptocurrency exchanges (despite a defined legal obligation to do so). To that end, NFT exchanges are becoming more creative with their use of blockchain data, utilizing thoughtful transaction monitoring and data analysis provided by companies such as Chainalysis to ensure compliance and set the stage for a sound regulatory framework for any regulations and oversight that may come down the pipeline.
During the discussion, we were also joined by Brandi Reynolds, director of AML and compliance at Bates Group, who addressed the expertise of crypto industry professionals in structuring a legally compliant enterprise.