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Blockchain

How compliance software detects fraud and money laundering involving crypto

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The crypto industry has boomed over the past 12 months. While 2019 began with a total market cap of $200 billion, the explosion in Bitcoin’s value resulted in this figure surging fivefold as 2020 began — and according to CoinMarketCap, the digital assets space was collectively worth $1 trillion at one point.

However, as the crypto sector continues to grow and flourish, so too does crypto-related crime. Virtual assets worth $3.8 billion were lost to fraud in 2019. This figure rose to almost $4.9 billion in 2020.

Fraud, money laundering and the financing of terrorism are not issues that are exclusive to the cryptocurrency sector — and every financial system on Earth has had to take action to ensure its infrastructure isn’t used for illicit purposes. But now, regulators around the world are stepping up their efforts to clamp down on criminal activity — and this has the potential to affect operations for crypto service providers, many of whom are still behind the curve.

Mainstream media coverage of digital assets has increased dramatically in recent months, with countless column inches devoted to BTC’s current bull run. This increased exposure also results in newfound scrutiny, especially when exchanges fall victim to high-profile hacks. Thankfully, there are ways for crypto businesses to take action, to protect their operations, and to work in the interests of their consumers in the process.

Achieving compliance

Amid the fractured landscape of regulatory developments for crypto, one of the most important sets of guidelines has come from the Financial Action Task Force, which has 39 members including the European Commission, Japan, the United Kingdom, and the United States.

The FATF recently unveiled a series of red flag indicators that suggest potentially suspicious activity is taking place — or possible attempts by entities to evade law enforcement. For example, the size and frequency of transactions could set off alarm bells for compliance officers, especially if such repeated payments are made that fall just underneath the threshold for reporting.

Other issues may arise where deposits are made using bank accounts that use a different name to the one registered with a crypto exchange, where mixers and tumblers are used to obfuscate the origins of BTC payments, or where potentially suspicious IP addresses are used.

At first, it might seem like a nightmare for virtual asset service providers to introduce safeguards that quickly detect when these red flag indicators emerge. In a competitive marketplace, some will be concerned about the costs associated with stopping high-risk transactions in their tracks — as well as the disruption that their operations could face if legitimate activity is mistaken for something more sinister.

But platforms do exist that can monitor new transactions in real time — instantaneously assigning a risk score to each and every transaction. This is by no means a straightforward task, as the high volume of transactions running through blockchains daily means that analysis needs to take place continuously and without interruption.

The speed with which bad actors can execute transactions also means that compliance systems need to be fast acting — identifying centers of suspicious activity, and creating meaningful connections to other wallets where potentially illegally acquired funds are distributed. Past data may also be used to anticipate future events, meaning that exchanges can receive a warning that potentially risky activity is about to happen — even if a transaction hasn’t been confirmed yet.

The benefits associated with this type of software aren’t hypothetical. In late September, KuCoin announced that close to $280 million was stolen from its exchange as a result of a security breach. Analytics tools enabled the company to track down and freeze these funds so they couldn’t be laundered further — and 84% of the assets taken were later recovered.

Taking action

The technical nature of blockchain — along with the prevalence of crypto scams — has caused a significant image problem for Bitcoin in society. But despite missteps in the first decade of its existence, aspects of blockchain design champion transparency and security — meaning it can offer far greater levels of protection than older financial systems. If $500,000 in banknotes are stolen from a bank vault, the funds could end up being far harder to track down than if the same amount was taken in BTC from an exchange that has safeguards in place.

Crystal Blockchain says its analytics platform enables compliance officers and anti-fraud departments to stop illicit activity in its tracks — and monitoring can either be performed manually or automatically as settings are configurable by the user.

This is achieved by understanding the provenance of funds being sent over the blockchain, their connections, their flow paths, and by alerting crypto service providers if these assets are stolen or fraudulent. Addresses and bank cards can be linked to fraud, extortion, ransomware and darknet marketplaces. Businesses can also be alerted when entities are attempting to deposit to or withdraw funds from accounts and exchanges that have little or no due diligence procedures in place.

Institutional adoption of cryptocurrencies is happening at a staggering rate — and as we head into 2021 and beyond, Wall Street is ramping up efforts to ensure it has the infrastructure required for traders to gain exposure to digital assets. But this comes with an expectation of a mature marketplace, meaning crypto service providers need to take the necessary actions to ensure they aren’t operating in the Wild West any more.

Marina Khaustova, the CEO of Crystal Blockchain, told Cointelegraph: “The crypto industry is relatively young, and as the technology develops it also brings with it unique compliance requirements. We need to combine the best practices of the more mature financial industries with the knowledge amassed by crypto market experts to combat money laundering and the financing of terrorism. By assisting with fraud identification and suspicious activity monitoring on the blockchain, Crystal aims to improve safety and trust in the global financial markets.”

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

Source: https://cointelegraph.com/news/how-compliance-software-detects-fraud-and-money-laundering-involving-crypto

Blockchain

Standard Custody takes new route to ‘qualified custodian’ status

It’s the first digital asset firm to receive approval on a de novo application for a New York trust license.

The post Standard Custody takes new route to ‘qualified custodian’ status appeared first on The Block.

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Standard Custody received its license to operate as a New York state-chartered trust on May 4, and it’s already making a play to gate-crash the institutional custody space.

Just days after its licensing, the firm announced the close of a $53 million Series B round for its parent firm, PolySign.

Cowen Digital Asset Investment Company led the round with a $25 million strategic investment. The two will also partner, with PolySign providing digital asset custody solutions for Cowen clients through its newly licensed trust arm, Standard Custody. Blockchain.com and Race Capital also participated in the round.

Through Standard Custody, PolySign is looking to fill a gap in the custody space. While many crypto firms are attempting to build all-in-one services, with exchange, brokerage and custody housed under the same roof,  CEO Jack McDonald says Standard Custody plans to differentiate itself by focusing solely on custody-based services for institutions.

Though Standard Custody plans to expand its range of services, McDonald says it will stop short of being an exchange unlike others in the custody space.

“We think that ultimately the institutions that are wading into the space, more and more of the traditional institutional asset managers, are going to want to see a segregation of duties there between exchange activity and custody activity,” he said.

That could mean hedge funds, family offices, endowments and exchanges could make up its client base going forward, but not retail-facing activities. Others serving the retail market have expressed interest in Standard Custody’s services, mostly due to its recent licensure. It’s the first to get approval for a de novo trust application in New York, and that’s positioning it to emerge as a favorable partner for a variety of clients, according to McDonald. 

To build out custody and escrow services, Standard Custody needed to be a qualified custodian. There’s more than one way to gain the distinction, but some fit better than others. To be a qualified custodian, firms can either become a registered broker-dealer with the Financial Industry Regulatory Authority (FINRA), a futures commodities merchant regulated by the Commodities Futures Trading Commission (CFTC) or you can be a federally or state-licensed trust bank.

For firms mainly looking to custody, it makes the most sense to become a trust but it’s recently become unclear how far a trust license extends outside state borders. The Securities and Exchange Commission (SEC) is currently seeking comment on how it should view state-licensed qualified custodians in the wake of a letter from Wyoming’s regulators. On the national level, Congress is still debating how much power the Office of the Comptroller of the Currency (OCC) should have to designate digital asset firms as national trusts and therefore qualified custodians.

Still, a New York trust license from the New York Start Department of Financial Service is the gold standard of state licenses. It’s the highest barrier of the state licensure frameworks, and also has more reciprocity than other states, meaning some other states recognize the New York trust charter and don’t require an additional license. Standard Custody is the first to receive a de novo approval, meaning it’s operating a new business as opposed to converting a previous entity like Gemini and Coinbase. That’s made it more attractive to businesses looking to set up shop in the U.S. without going through onerous regulatory frameworks.

“We do have a lot of interest in our technology from some of the more retail-oriented strategics out there and specifically wanting to tap our capabilities to business in New York and more broadly in the U.S.,” said McDonald.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://www.theblockcrypto.com/post/104979/standard-custody-qualified-custodian-raise-bank-charter?utm_source=rss&utm_medium=rss

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Blockchain

How will ‘Ethereum killers’ affect the ETH rally?

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Many in the crypto community didn’t anticipate this altcoin’s rally. Several questioned Ethereum’s move comparing it to its biggest competitor, Bitcoin. Looks like the evergreen debate of ETH vs BTC is going to resurface again. Can Ethereum actually flip Bitcoin anytime soon? This is the latest hot topic.

ETH, the world’s largest altcoin, has had an amazing start to this year. It commenced its journey at $720 on the charts to just under the $4000 mark at press time.

Ethereum’s market cap is now half the size of Bitcoin’s. The ratio between the assets is 0.08. Here’s a glimpse of the Flippening index.

The premier altcoin was the topic of discussion during a recent interview hosted by Unchained podcast with Jeff Dorman, the chief investment officer at Arca. The investor stated:

“With ETH almost hitting the $4k mark, other ‘Ethereum killers’ can’t just take its throne.”

He reiterated that the $4k mark directly pointed at the increasing institutional interest from different firms which were once only devoted to Bitcoin. He added:

“We are witnessing the early innings of institutional adoption beyond Bitcoin with Ethereum.”

In a note titled “The Rise of The Institutional Adoption of Ethereum,Eliézer Ndinga, a senior research associate at 21Shares expressed his optimism towards the surge in the Ethereum market. Furthermore, a recent discussion, by Su Zhu and Hasu with CryptoCobain too portrayed a prevalent bullish ETH mindset, indicating that the bull case for Ethereum is stronger than ever.

With respect to the upcoming Ethereum developments, the CIO remained critical of some of them. According to him ETH was still in ‘the event and catalyst-driven bucket’ stage. Talking about the EIP-1559 proposal, he stated:

“…..speaking about the transition, it actually hasn’t happened yet. things can go wrong, can be bugged. It’s too early to say about its effects, but ETH will still rise even if there are issues with this transition.”

However, Dorman also stated that:

“A lot of applications that are built on ETH are seen by traditional investors as better places to put their money than Ethereum itself, it made more sense.”


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Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://ambcrypto.com/how-will-ethereum-killers-affect-the-eth-rally

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Blockchain

Chainlink price prediction: Chainlink retests $41, set to move higher?

TL;DR Breakdown LINK tests $44 resistance overnight. Support retested at the $41 level over the past hours. Next support at $40. Today’s Chainlink price prediction is bearish as the market moved lower after setting a lower high around $44. Currently, LINK/USD retests the $41 support, once it is broken, we should see further downside over […]

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TL;DR Breakdown

  • LINK tests $44 resistance overnight.
  • Support retested at the $41 level over the past hours.
  • Next support at $40.

Today’s Chainlink price prediction is bearish as the market moved lower after setting a lower high around $44. Currently, LINK/USD retests the $41 support, once it is broken, we should see further downside over the next 24 hours.

Chainlink price prediction: Chainlink retests $41, set to move higher? 1
Cryptocurrency heat map. Source: Coin360

The overall market trades with mixed results as Bitcoin trades flat around 0 percent, while Ethereum has lost almost 3 percent. Stellar (XLM) is among the best performers with a gain of 5 percent. 

LINK/USD opened at $41.5 after bearish close yesterday set a lower high at $48. Earlier today, another lower high was set around $44.5 after a retest of $41 support. Therefore, the market trades in an increasingly tighter range. Once the range is broken, we will see where the market is headed next week. 

Chainlink price movement in the last 24 hours

The LINK/USD price moved in a range of $41.08 – $44.61, indicating a moderate amount of volatility. 24 trading volume has decreased by 13.92 percent and stands at $2.2 billion. Meanwhile, the total market cap stands at $17.7 billion, ranking the cryptocurrency in 13th place overall.

LINK/USD 4-hour chart – LINK 

On the 4-hour chart, we can see the Chainlink price pushing to break the $41 mark once again. 

Chainlink price prediction: Chainlink retests $41, set to move higher?
LINK/USD 4-hour chart. Source: TradingView

Overall the market continues retracing from the all-time high set around the $53 mark on the 10th of May. The new all-time high was set due to a 70 percent upswing from the previous major support level around $31 set on the 23rd of April. Therefore, we could see similar performance over the upcoming weeks once the Chainlink price stops retracing.

Earlier this week, Chainlink made two separate waves lower, resulting in a total retracement of around 25 percent. The support around the $40-$41 mark has already been retested twice. Therefore, we could see the support break later today as bears continue pushing LINK/USD lower.

Once the support is broken, we could see LINK/USD move towards the next minor support, around $38. From there, the market could potentially start to reverse in a similar way as during the middle of April. 

Alternatively, if a further downside is rejected over the next hours and the $40-$41 support holds, we could see LINK/USD move sideways over the next 24 hours as it prepares a base from which to push higher early next week.  

Chainlink Price Prediction: Conclusion 

Chainlink price prediction is bearish as the market continues trading in a bearish momentum over the past days. Earlier today, another lower high was set around $44.5, indicating that bears are still in control, and we are likely to see LINK move below the $41-$40 support area early next week.

While waiting for further Chainlink price action development, read our latest guides on Litecoin mining software, Ethereum mining pools, as well as Ethereum mining software.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://www.cryptopolitan.com/chainlink-price-prediction-2021-05-16/

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