- Consensys’ KYC product will focus on the De-Fi sector.
- The automated system will see Consensys monitor the transactions of over 280,000 tokens.
- Consensys decided to focus on the DeFi sector due to its massive growth over a short time.
Consensys Inc. is planning to undergo a transformation that will see it become a full-service provider for the Ethereum network. A report unveiled this news on June 8, noting that the firm is on the verge of releasing an automated system to help make the crypto space safer. Per the publication, the New York-based company is launching a product that is centered on the know your customer (KYC) regulatory compliance prerequisites.
Speaking about this initiative, Lex Sokolin, an executive at Consensys said,
“There are more and more people building decentralized apps that need this as a Lego piece. What we are trying to do is make activity on the decentralized financial infrastructure much more safe, transparent, much easier to trace.”
KYC compliance is a significant problem in the crypto space
While traditional payment systems keep a sharp eye on illegal activities such as money laundering and terrorist financing, the crypto space is yet to tackle this problem. This is because KYC policies in the sector are spotty and varied. As a result of this inconsistency, authorities have increased scrutiny in the crypto industry. Due to the increased oversight, numerous crypto firms have found it difficult to adhere to KYC compliance requirements.
Some companies have gone as far as hiring third-party compliance and analytics firms such as Chainalysis Inc. and CipherTrace Inc. to help ascertain that different customers and batches of coins are not associated with hacks or criminal activities.
Consensys hopes that entering the compliance sector will help alleviate this problem. Per the firm, it hopes its approach of focusing on Ethereum only will help it survive in the already crowded space. By choosing Ethereum, Consensys hopes to relieve compliance issues for the numerous coins that run on the network.
Focusing on the decentralized finance sector
Per the report, this launch will see Consensys analyze transactions relating to over 280,000 coins that have been issued on Ethereum. The firm will reportedly focus on exchanges and decentralized finance (DeFi) platforms, which facilitate lending and borrowing among other financial functions by leveraging automated software. Sokolin noted that there has been a massive growth of such DeFi services over the past few months. As such, the nascent industry’s user base has grown from 20,000 in 2019 to 200,000 now.
Do you think Consensys entering the compliance sector will help ease regulatory scrutiny in the crypto space? Share your thoughts in the comment section below.