ConsenSys' new regulatory compliance product will be at hand to analyze transactions in the growing decentralized finance (DeFi) space.
The Ethereum venture studio said the newly launched Codefi Compliance software suite would provide compliance and analytics for exchanges and DeFi projects across a range of different regulatory buckets, such as counter-terrorism financing (CTF) and anti-money laundering (AML).
Focused on the Ethereum ecosystem, the tool can track up to 280,000 different tokens that are based on the protocol – such as those built on the ERC-20 or ERC-721 standard. The idea, according to a press release, is to replace the varied compliance in crypto at the moment, with the more consistent sort found in the traditional payments sector.
Codefi Compliance allows clients to track digital assets, monitor user behaviors as well as watch fund flows, and compile full data analysis. It can also work across multiple jurisdictions, with settings adjustable to take local regulations into consideration.
According to Lex Sokolin, a ConsenSys executive, this is increasingly important as Ethereum becomes the hub for the emerging DeFi space. The number of unique daily wallets on DeFi – a proxy for user numbers – rose nearly 530% in 2019, according to a DappRadar report.
“Providing robust AML/CFT compliance for Ethereum-based digital assets is a keystone step in bringing the institutional financial industry to decentralized finance," Sokolin said. "Codefi Compliance is the next module in our product suite to eliminate complexity and risk in using DeFi, and help any business benefit from using digital assets.”
Codefi Compliance has already been made compatible with ETH 2.0, the upcoming network upgrade that allows Ethereum to scale.
Of course, this also means ConsenSys is also putting itself in direct competition with the likes of Chainalysis and Elliptic, two data analytics firms that have turned blockchain traceability and analytics into a fast-expanding and lucrative side industry that has attracted multi-million dollar contracts from the U.S. government.
But ConsenSys emphasizes it has no interest in upsetting the applecart. It will focus exclusively on Ethereum: its home ground. That means that its new competitors will be able to continue to provide their services, relatively unhindered, for the Bitcoin network.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.