Chainalysis gives new solutions for FATF’s ‘Virtual Asset Service Providers’ recommendations

Decisions taken by regulatory authors have usually created a make or break situation for cryptocurrency companies in the short term or the long term. In a recent letter written to the Financial Action Task Force [FATF], Chainalysis, a cryptocurrency organization touched on the KYC-AML [Know Your Customer-Anti Money Laundering] recommendations given by the regulatory body.

One of the main clauses as mentioned by Chainalysis in the report read:

“Forcing onerous investment and friction onto regulated VASPs, who are critical allies to law enforcement, could reduce their prevalence, drive activity to decentralized and peer-to-peer exchanges, and lead to further de-risking by financial institutions. Such measures would decrease the transparency that is currently available to law enforcement.”

The statement comes after the FATF stated that companies involved in the virtual assets field need to submit information regarding individual transactions whenever required by the FATF. Another rebuttal to this recommendation made by Chainalysis stated that in most circumstances, VASPs are unable to tell if a beneficiary is using a VASP or their own personal wallet in any given transaction. According to the cryptocurrency company, the above-mentioned factor is another reason why requiring transmission of information identifying the parties is not feasible.

The last time Chainalysis had grabbed headlines was when it got embroiled in the Coinbase controversy a month back. Coinbase had voluntarily or involuntarily roped in Chainalysis when Christine Sandler, Coinbase’s former Director of Institutional Sales had stated that its partners had sold user data to other parties. The comment was refuted by Chainalysis in a blog post, which said:

“We do not share any personally identifiable information about cryptocurrency users with exchanges. When we screen a transaction in KYT for an exchange customer, we add it to our list of transactions made by that service.”

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