In brief

  • TRM Labs will provide real time crypto transaction monitoring for the FalconX exchange.
  • FalconX raised more than $17 million in venture funding earlier in 2020.
  • TRM Labs is supported by PayPal and Y Combinator.

Crypto exchanges are ratcheting up the pressure when it comes to illegal activity.

Digital asset exchange FalconX announced on Tuesday a partnership with Paypal-backed TRM Labs to bring real-time transaction monitoring to the platform. TRM’s transaction monitoring service will automatically analyze digital asset transactions to detect potential money laundering and other illegal activities on the FalconX exchange.

It’s another sign that a focus on regulatory compliance will be paramount for the next generation of digital asset exchanges.

The TRM software traces sources and destinations of funds to monitor the ever changing landscape of hacks and illicit market transactions, as well as efforts to circumvent sanctions or other international laws. TRM’s Transaction monitoring service provides comprehensive support for more than 2,000 digital assets.

“TRM enables us to build trust with our customers, and grow our business,” FalconX co-founder and CEO Raghu Yarlagadda said in a press release.

“It is comprehensive, easy-to-integrate, and battle-tested by industry leaders, giving us the peace of mind that compliance is covered. Our rapid growth is a testament to the strong compliance foundation that we’ve had since the beginning, thanks to TRM.”

TRM’s service allows a single employee to monitor millions of dollars of transaction volume in a structured, real-time risk assessment report. TRM will also provide market intelligence to help FalconX acquire new clients and increase trading volume among existing users. 

FalconX raised $17 million earlier in 2020 in a pre-seed funding round led by Fidelity-backed Avon Ventures and Coinbase Ventures. The digital asset exchange has processed more than $7 billion in transaction volume since being founded in 2018, servicing hundreds of users, many institutional clients typically with more than $10 million in assets under management.

TRM Labs launched in 2019 and is backed by PayPal, Blockchain Capital, Initialized Capital, and Y Combinator.

“We believe that a more open financial system requires new, innovative solutions for Anti-Money Laundering, Combating the Financing of Terrorism (CFT), and sanctions compliance,” TRM Labs CEO Esteban Castaño told Decrypt.

“We are pleased to see FalconX leverage our platform to establish the highest standards for digital asset compliance, while onboarding the next generation of institutional investors.”