Bank of New York Mellon, commonly known as BNY Mellon, is an American investment banking service holding company headquartered in New York City. The institution, being formed from the merger of The Bank of New York which now stands as the world’s largest custodian bank and securities services company with $2.2 trillion in assets under management and currently overseeing $46.7 trillion in assets, has partnered with blockchain software firm, Chainalysis (a blockchain-data analysis platform that offers services to traditional financial institutions, allowing large firms to manage the legal risks that come with cryptocurrency more easily) to track its users’ crypto transactions. Sealed in the agreement is that the Bank of New York will utilize Chainalysis software to track, record, and make use of the data surrounding crypto assets.
The need for Tracking transactions
With the use of money mules, structuring potentials, transaction speed, customer anonymity, and others, Blockchain technology seems to be punctured a bit, creating the need for regulations and policy to make the system healthy. This regulation will include possible ways to deal with criminal threats such as money laundering and the financing of terrorism.
The potential threat that cryptocurrencies pose to the financial system is significant. In the first five months of 2020 alone, research suggests that cryptocurrency thefts, hacks, and fraud amounted to about $1.36 billion – one of the highest levels on record. To manage that disruptive effect, regulators around the world have imposed new compliance rules to ensure that cryptocurrency service providers, or any institution that deals with crypto are able to detect and prevent threats and ensure that the authorities are made aware of emergent criminal methodologies.
Why BNY secured the Money Bag with Chainalysis (Partnership)
Chainalysis has made many great feats over time, building a robust structure that makes it stand out from the crowd. Some seamless feature of Chainalysis has made its ecosystem one to be embraced, considering the offer it provides which includes; software that makes it easy for the traditional financial institutions it services to know its customers, having Reactor and Kryptos, with the most being its KYT flagging system which automatically detects whether cryptocurrency transfers are deemed high risk.
With Chainalysis, if the KYT software sees crypto being transferred to a sanctioned wallet address, it can preemptively block the transaction. Reactor provides firms with further investigative power on the blockchain while Kryptos collects and translates complex data into cogent information for institutions. With these features offered by Chainalysis to BNY, Bank of New York’s aim to partner entails a good deal.
Remarks from Head of Global Custody, BNY
With reference to the partnership, Caroline Butler, head of global custody, tax, and network management at BNY Mellon, made a notable remark on the importance of ensuring trust as the bank enters the world of digital assets. According to her;
“At BNY Mellon, we enter the digital asset market with the title of the most trusted asset service provider. Working with Chainalysis and other leading fintech companies, we are developing our capabilities in the growing cryptocurrency industry and reflecting this in our products.”