Blockchain-data analytics company Chainalysis announced a fast-tracked launch of two free screening tools to help provide sanctions oversight to the crypto industry.
According to the blog post provided by Chainalysis on Thursday, the screening tools include two main components of new tracking software that will assist exchanges in screening wallets and transactions for activities that appear to be skirting economic sanctions. The first tool, which is immediately available, is an on-chain oracle.
As the military conflict in Ukraine intensifies, western allies continue to expand sanctions on Russia, including by targeting opportunities to employ crypto assets to circumvent the restrictions. Blockchain analytics firm Chainalysis has joined these efforts, announcing two new tools that will be free for the industry.
“These solutions will enable the builders of decentralized web3 protocols like DEXs, DeFi platforms, DAOs, and Dapps, as well as practically anyone interacting with cryptocurrency, to easily validate that they aren’t interacting with cryptocurrency addresses associated with sanctioned entities,” said in the press release.
One of the tools, an on-chain oracle designed for smart contracts, is already available and users can call it from another smart contract to check if an address is on a sanctions list.
“The Chainalysis oracle is deployed on most EVM chains like Ethereum, Avalanche, BSC, Polygon, Optimism, Arbitrum, Celo,” the company said.
An upcoming API, expected in April, is being developed for web and mobile user interfaces as well as web servers. With it, users will be able to verify if a cryptocurrency address is on a sanctions list. The Specially Designated Nationals List of the US Treasury Department’s Office of Foreign Assets Control will be taken as a reference.
Chainalysis claims these free tools will allow crypto businesses and other organizations operating in the sector to quickly check a crypto address before allowing it to connect with their platforms and services. The company also offers a range of other solutions aimed at mitigating exposure to various risks stemming from different financial activities.
Currently, users of DeFi platforms can operate with more anonymity than centralized exchanges, which tend to have more strict identity verification protocols in place that have strict Know Your Customer (KYC) requirements.
Meanwhile, US-based cryptocurrency platform Coinbase has further supported the idea that the inherent transparency and public nature of cryptocurrencies can actually assist governments in enforcing sanctions.
Where traditional fiat currencies allow bad actors to use shell companies, tax havens, and opaque ownership structures to “obscure the movement of funds,” crypto-assets are fundamentally public and traceable, which helps governing authorities “detect and deter evasion,” said Coinbase chief legal officer Paul Grewal in a blog post earlier this week.