These bitcoin services in Spain begin to monitor all your transactions

Key facts:
  • The task will be handled by blockchain surveillance company, Merkle Science.

  • The platforms will apply “smart” regulation against illicit activities.

The bitcoin exchange, Criptan, and cryptocurrency custody service, Onyze, both with operations in Spain, established an alliance with blockchain surveillance company, Merkle Science. Now, all transactions that users make on these platforms will be monitored for suspicious patterns that evidence possible illicit activity.

The deal was unveiled on Tuesday, July 20 by the blockchain intelligence company. Through a statement, the parties informed that they will have several lines of action that include: identifying criminal portfolios, operations with suspicious patterns and drawing up the so-called “black lists”.

The goal would not only be to detect potential fraudulent transactions, but also investigate possible financial crimes committed with cryptocurrencies. It is not clear what is the limit that companies will have in the investigations since, in any case, the task would correspond, in theory, to the police or criminal investigation agencies.

The amounts related to scams (in the graph) decreased considerably in 2020. Source: Chainalysis.

“The partnership demonstrates these companies’ commitment to developing a compatible ecosystem, as digital assets become a key pillar of the financial industry. Intelligent regulation brings with it further development and innovation within the sector, ” Merkle Science explained in the press release.

Although, for security, the blockchain intelligence company did not reveal how its “rules of behavior engine” operates, it should be noted that the surveillance covers all inbound and outbound transactions. That is, users must comply with KYC/AML or “Know your customer” and anti-money laundering controls.

The move of Criptan and Onyze is aligned with the strict regulations that the European Union has issued on trading bitcoin and other cryptocurrencies. The guidelines for monitoring transactions are also in line with those issued in the past by the Financial Action Task Force (FATF), one of the bodies that has most proposed regulations towards bitcoin.

Blockchain surveillance, a millionaire business

Intelligence tasks related to operations on a blockchain are not new. In the market there are companies such as Chainalysis, Elliptic, CipherTrace and Coinbase that offer their services to private companies or government entities to detect possible crimes committed with cryptocurrencies.

This is a multimillion-dollar business in which pattern recognition techniques called “heuristics” are used, as reported by CriptoNoticias. Platforms for the P2P exchange of bitcoin, such as LocalBitcoins or Paxful, have announced in the past alliances of this type such as Criptan, Onyze and Merkle Science.

The United States is one of the most evident cases in hiring of this type. Agencies such as the Secret Service, the Internal Revenue Service (IRS), the Securities and Exchange Commission (SEC) and even the Military have contracted some kind of service related to surveillance in blockchains networks.

Despite all the investigations ahead, a Chainalysis report released in February of this year found that less than 1% of the value moved with bitcoin and cryptocurrencies comes from crimes.

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