Fireblocks Inc., an enterprise-grade platform for storing, transferring and issuing distributed ledger blockchain assets, today announced the integration of blockchain data security firm Chainalysis Inc. to help financial institutions and cryptocurrency businesses comply with anti-money-laundering and finance security best practices.

Starting today, the Fireblocks will begin using Chainalysis’ “know your transaction” technology to monitor cryptocurrency transactions in real time.

Blockchain technology uses widely distributed ledgers to store historical records of transactions in a tamper-proof format using cryptography and specialized proof of work to protect privacy and ensure trust in the network. Although this technology is useful for keeping a record of past transactions that can be reliably ensured to remain unchanged, financial companies still need to submit to audits, provide information on customers and submit to third-party analysis for regulatory purposes.

Using the Chainalysis platform, Fireblocks customers will now gain access to sending and receiving AML-approved funds, customizing transaction policies based on assigned risk scores, automatically logging AML transaction reports and putting into operation the ability to share such reports with regulatory bodies.

“Both security and compliance are integral to building trust in the cryptocurrency industry,” said Jason Bonds, chief revenue officer at Chainalysis. “By bundling product offerings with our integration partners through the Chainalysis Partner Program, we are ensuring our customers adhere to security and AML best practices, ultimately making cryptocurrency more accessible for all.”

Blockchain technology underlies the $117.8 billion cryptocurrency token market for Bitcoin, which has become the largest cryptocurrency asset in the world. The technology has also been explored by numerous token and asset issuance companies over the years in an attempt to integrate the technology into financial industries.

Financial technology examples include R3 CEV LLC’s foray into cryptocurrency token assets for business, Ant Financial’s OpenChain blockchain platform for small business, banking and payments startup Sila Inc. and fintech-focused blockchain platforms Spring Labs Inc. and PeerNova Inc. MasterCard Inc. also launched a cross-border payments solution pilot with R3 CEV LLC in September using blockchain technology to greatly speed up transactions.

According to a report from MarketsAndMarkets, the fintech blockchain market is expected to grow to $6.2 billion in 2023 from an estimated $230 million in 2017. Drivers for this growth include higher compatibility for blockchain with financial services, increasing cryptocurrency market capitalization and the continuing trend of businesses adopting cryptocurrency tokens for asset exchange.

Any time money is transacted between parties, it can fall under the purview of regulatory agencies in the countries the transactions take place. That puts a burden on the company involved in the transactions to comply appropriately with any regulations.

As transaction volume increases, so does the complexity of keeping up with reporting for these regulatory purposes. To ease this burden, Chainalysis “know your transaction” technology allows businesses to identify and monitor high-risk transactions in high volumes thus allowing the company to focus on the most sensitive activity and fulfill regulatory obligations to report suspicious activity.

Fireblocks can now automate workflows for customer financial institutions and give them the best support possible regarding reporting for compliance purposes. Both Fireblocks and Chainalysis believe that will help further the adoption of blockchain technology in the financial sector.

Staying on top of compliance while providing extra security for transactions also means financial customers can agree to more transactions, as well as understand and report risk with less worry that they will run afoul of regulatory obligations.

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