LONDON—Could a new tool make credit unions and banks more comfortable with bitcoin?
Bitcoin intelligence provider Elliptic is rolling out a program with California-based Silvergate Bank to analyze and screen possible nefarious activity on the bitcoin blockchain, reported CoinDesk.
The effort is focused on helping financial institutions assess future bitcoin-based business clients, as FIs often see risks with the cryptocurrency that are greater than its rewards.
"The banks that are working with bitcoin companies really don’t have much visibility into how effective they are at handling the risk associated with bitcoin transactions," James Smith, Elliptic's CEO, told CoinDesk. “Until now, they pretty much have had to rely on the word of the exchange or whoever (processed the transaction) to say, 'We’re doing the best we can'."
Elliptic's software allows financial institutions to take a more robust approach in vetting bitcoin businesses and complying with know-your-customer (KYC), anti-money laundering (AML) and Bank Secrecy Act (BSA) requirements, CoinDesk stated.
“The platform will help banks find suspicious bitcoin activity, allowing them to reduce risk assessment costs for current and potential customers, while demonstrating to regulators that there are internal safeguards in place to weed out bad actors,” said CoinDesk.
"We see this as a great step forward in terms of raising the industry standard, in terms of compliance, improving the level of risk mitigation and, ultimately, allowing Silvergate to work with more businesses who are handling bitcoin," Smith told CoinDesk.