Blockchain analytics company Chainanalysis releases tools that make the blockchain less anonymous. The intention is to warn you when you start trading with a wallet subject to sanctions.
Chainanalysis, which does data analysis for blockchain, has announced two tools that should make it easier to screen crypto wallets. Specifically, in this case, companies that want to avoid trading with organizations or individuals are subject to international sanctions.
The list of sanctioned individuals and organizations has expanded considerably in recent weeks due to the war in Ukraine. For example, organizations in the US and the EU are not allowed to trade with many Russian banks and companies. This also has consequences for cryptocurrencies. As countries worldwide are taking additional economic sanctions in response to Russia’s invasion of Ukraine, decentralized Web3 groups such as DEXs, DeFi platforms DAOs and dapp developers need easy tools to help them, and their customers stay compliant with those sanctions. Chainanalysis said in a press release.
Cryptocurrencies are as yet little regulated and largely anonymous. As a result, they have the image of being a Wild West for finance, with all the fraud and criminal activity that comes with it. It is also expected that cryptocurrencies will now become more prevalent in Russia, for example, as more traditional money transactions have become almost impossible. “Now is the time for the industry to show that the inherent transparency of blockchain means that you cannot evade sanctions with cryptocurrencies,” said Michael Gronager, CEO of Chainanalysis.
The company has released two tools. The first tool is a so-called ‘on-chain oracle’, which has already been rolled out. It is a ‘smart contract’ on the blockchain whose job is to see if a crypto wallet is the subject of sanctions. Chainanalysis manages this smart contract and says it will be updated regularly. In addition, there is also an API, which should be released next month. It uses the same data as oracle but can be used for public websites and mobile user interfaces.
With the tools, Chainanalysis hopes that small businesses and decentralized organizations in the crypto sector can build in the necessary checks so that customers can trade money and effigies of monkeys without encountering international sanctions. Similar background research already exists on more centralized platforms such as Coinbase.