Bank of New York (BNY) Mellon has announced a partnership with blockchain data platform Chainalysis to help track and analyze crypto products. BNY Mellon is the world’s largest custodian bank, currently controlling $46.7 trillion in assets.
Chainalysis is a blockchain data analytics platform that provides services to traditional financial institutions so that large companies can more easily deal with the legal risks associated with cryptocurrencies. As part of the partnership, BNY will use Chainalysis software to track, record and use data related to cryptocurrencies.
Chainalysis’s risk management software includes KYT (Know Your Transaction), Reactor and Kryptos with the most important KYT token system that automatically determines if cryptocurrency transfers are considered “high risk.”
If the KYT program sees the cryptocurrency being transferred to an authorized wallet address, it can prevent the transaction from being blocked. Reactor enables companies with additional investigation capabilities in the blockchain, while Kryptos collects complex data and turns it into critical insights for enterprises.
In her keynote speech, Carolyn Butler, Head of Global Repository, Tax Administration and Networks at BNY Mellon, highlighted the importance of building trust as banks enter the world of digital assets:
At BNY Mellon, we are entering the digital asset market with the title of Most Trusted Service Provider. In partnership with Chainalysis and other leading fintech companies, we are developing our capabilities in the growing cryptocurrency industry and reflecting that in our products. ”
While the services offered by Chainalysis are drawing criticism from cryptocurrency users who focus more on privacy, its ability to provide critical monitoring services to large corporations helps legitimize the use of cryptocurrencies in traditional finance.
“Chainalysis has long believed that financial institutions have a critical role in the overall growth and success of the cryptocurrency industry,” said Jonathan Levine, co-founder of Chainalysis.
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BNY Mellon’s commitment to cryptocurrency began last February when they announced plans to hold, transfer and issue bitcoin and other cryptocurrencies as an asset manager on behalf of their clients.
This follows the broader trend of traditional financial warming towards the idea of cryptocurrency, with big names such as Morgan Stanley, Citibank and JPMorgan currently operating and investing heavily in cryptocurrency.