- Chainalysis has announced the rolling out sanctions screening tools for crypto wallets
- The company said the tools will be available for free to ensure the sanctions compliance of crypto wallets.
Software company Chainalysis has rolled out new tools for screening crypto wallets that do not comply with sanctions. The two newly-launched sanctions screening tools will make it easier to detect wallets that are not abiding by laid-down sanctions. With the aim of ensuring regulatory compliance, the new screening tools Chainalysis launched include an on-chain oracle and an application programming interface (API) that connects computers.
Chainalysis stated the unveiling of the new screening tools is in the wake of suggestions that Russia may use crypto to evade sanctions. It is no news that there have been a lot of sanctions imposed on Russia since the country invaded Ukraine. As the US continuously places sanctions on Russia, many countries are doing the same. In addition, several companies have cut ties with Russia since the war started. As some countries stop importing their products, many others have stopped offering their services to Russian residents. As it stands, Russia does not have access to foreign capital, and experts are of the opinion that the government may utilize crypto to avoid the negative impacts of the economic sanctions.
Due to the current happenings, Chainalysis said decentralized Web3 groups such as DeFi, DEXs, dapp, and DAOs are exploring “lightweight tools” to support them and their customers in compliance with sanctions policies. The company’s CEO Michael Gronager commented:
Now is the time for the industry to demonstrate that blockchains’ inherent transparency make cryptocurrency a powerful deterrent to sanctions evasion.
Chainalysis launches screening tools for sanctions compliance
Furthermore, the screening tools Chainalysis launched are designed to comply with a series of instructions. The instructions will allow smart contracts to validate crypto wallets in a sanctions designation. The company added that it would be in charge of the smart contract’s maintenance, and the update will be regular. Similarly, the API will confirm crypto addresses on the sanctions list by utilizing the same data as the oracle. Unlike the on-chain oracle for DeFi projects, the API is for mobile user interfaces and the public web.
Specifically, the new screening tools by Chainalysis are to guide DeFi projects and DAOs in determining sanctioned crypto addresses. It said decentralized protocols and platforms will use the new tools in conducting “basic sanctions checks. The company added:
Many decentralized protocols and platforms that have more recently grown in popularity do not incorporate tools that allow for effective management of sanctions risk.
The CEO added that Chainalysis considered the development of the screening tools a priority. According to him, the company desires to present the crypto market with “what they need.”
Interestingly, Gronager said the screening tools would be available for the crypto industry to use for free.