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Wyoming joins hands with Chainalysis to counter cybercrime and money laundering

Photo of: Dennis Ramos
by Dennis Ramos

Perhaps the biggest trouble looming in the financial industry is the fear of malicious attacks and money laundering leading to cybercrimes. The system over the years has become robust, yet it needs more work. Considering how important it is to work on these aspects The Wyoming Division of Banking has partnered with the blockchain analytics firm Chainalysis to fight against cybercrime, keep money laundering under check and ensure criminal activities are at bay. 

The announcement of this much-needed partnership was made in a Chainalysis blog featured on September 17th. The blog further elaborated that the blockchain analytics firm’s inclusion will provide extra clout and strength to accelerate its monitoring activities. This will further improve its ability to trace illicit activities surrounding digital assets. The regulator will be using products and tools from the house of Chainalysis to verify Wyoming bank’s compliance with anti-money laundering, Bank Secrecy Act, Know-Your-Customer, and sanctions. The news of the alliance came a day after the U.S State of Wyoming had bestowed the banking charter to the Kraken, one of the major cryptocurrency exchanges.

We reported that the Wyoming Banking board had recently approved the application of Kraken to form a Special Purpose Depository institution of SPDI which allows the exchange to develop a bank in the State of Wyoming. This is a major step in the crypto space as Kraken has become the first regulated cryptocurrency bank in the history of the US. And now with the stated partnership, it is clear that the state also wants to maintain control and closely monitor the crypto transactions. 

Chainalysis is a very well known analytics firm that provides real insights to identify who the real-world threat actors are. It has stated that it can map out addresses of such entities. It said:

“So that means when you are in our product you can see that someone at Coinbase just sent X number of Bitcoin to someone at Kraken, or to a darknet market or to a child pornography site, or any number of services or entities on the blockchain. The way that we map it is through proprietary heuristics. It’s a combination of technology […] and actual people who work at our company and validate certain services.”

The partnership is said to be a one-year agreement in which Chainalysis will train Wyoming senior examiners on crypto trading practices. The division will be given two monitoring software licenses and investigatory support as it slides in its new crypto-compliance duties and rules. 

Wyoming has always been at the forefront of digital asset regulation in the U.S. since 2018. Last year, the Wyoming Legislature had authorized the SPDI charter and also gave birth to a new legal framework for digital asset custody and fiduciary activities. It has been working to develop firm and sound regulatory policies that revolve around crypto-assets. This way digital currencies can be monitored as well as transacted in a secure manner. Hence it is endeavoring to find some middle-path between crypto and traditional banking institutions which has already begun with Kraken.