Chainalysis launches AML solution for Tether

A blockchain analysis company, Chainalysis, today announced that it has launched a service that’ll allow the stablecoin company, Tether, to track suspicious transactions in real time. 

Tether, which is pegged to the value of the US dollar, is the largest stablecoin by market capitalization. It increased from $1.8 billion on January 1, 2019, to $4.6 billion in February 2020. 

The new system is called Chainalysis Know Your Transactions (KYT). Tether will connect to it via an API—an automatic feed—and then can track tokens from issuance to redemption. It doesn’t require Tether to share user’s identifying information, which is only kept on Tether’s servers.

“Stablecoins like Tether, which peg their value to other assets, were developed to appeal to mainstream audiences who are wary of the price volatility associated with many traditional cryptocurrencies,” said Jonathan Levin, co-founder of Chainalysis.

“By putting proper AML transaction monitoring in place, Tether is demonstrating its commitment to transparency and regulatory compliance, further building trust among its growing user base,” he added. 

Paolo Ardoino, Tether’s chief technology officer, added that the company has a “responsibility not just to regulators but also to the cryptocurrency ecosystem to have transparent, automated compliance solutions in place to handle any amount of volume at any given time.” 

Tether is under investigation by the New York Attorney General, which alleges that its sister company, Bitfinex, drew funds from Tether's reserves to mask an $850 million hole in its finances. Will Chainalysis allow Tether to get to the bottom of its own suspicious transactions?