Blockchain Analytics: Fueling Crypto Adoption

Institutional interest in digital assets is increasing, and with it the demand for analytics platforms in the chain. These tools are invaluable to compliance professionals, investigators and regulators who need to understand the patterns and entities involved in cryptocurrency transactions. Tom Robinson, co-founder and chief researcher at research firm Elliptic, and Eray Akartuna, a senior cryptocurrency threat analyst at Elliptic, recently shared their insights with Cointelegraph on this topic.

Robinson outlined several uses of chain analysis for institutional clients. These include anti-money laundering (AML) and sanctions compliance for crypto exchanges and businesses dealing with crypto assets, due diligence on crypto businesses and investigation of crypto transactions. He emphasized that the visibility of most crypto transactions on the blockchain makes it easier to identify funds originating from criminal activity.

Akartuna highlighted the role of artificial intelligence (AI) and machine learning in chain analytics, particularly in fraud prevention and AML. He explained that machine learning can help identify patterns in blockchain transactions, which can vary between blockchains such as Bitcoin and Ethereum. He also discussed the use of heuristics to identify illegal activities and actors on a blockchain and their wallet addresses.

One of the most complex problems Elliptic has recently solved, according to Robinson, is identifying the proceeds of crime in crypto, even when it is laundered across assets and chains. They developed a method called holistic screening to trace crypto assets between assets and blockchains, which is now essential to prevent money launderers from exploiting businesses’ lack of visibility into their activity.

Akartuna noted that while banks’ adoption of digital assets and chain analytics has been slow, it is steadily increasing. Compliance is a major concern for banks, and blockchain analytics is seen as a crucial part of addressing regulators’ concerns. He also mentioned the importance of these tools for institutions looking to get involved in the decentralized finance (DeFi) space.

Robinson added that they maintain a constant dialogue with regulators around the world, many of whom use Elliptic’s products. This communication is essential for regulators to understand how blockchain analytics solutions work and to have confidence in the compliance programs operated by exchanges and banks that use these products.

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