Cryptocurrency intelligence company, CipherTrace, will partner with Shyft, a company that develops federated identity and blockchain attestation platforms, to help exchanges secure the identities of their users, in light of new crypto-regulations.
This partnership took place under the recommendation and guidance of the Financial Action Task Force (FATF). The companies have been working on a solution for travel rule compliance. According to the companies, the key is to provide exchanges an option to use smart contracts and certain cryptographic access controls which would allow exchanges to manage access to private details, including names, addresses and bank account details.
CipherTrace and Shyft are working together on an encrypted ledger, where the originator and beneficiary information can be placed on-chain and only the intended recipient can decrypt it. The ledger merges identification, anti-money laundering and forensics to create a blockchain network for the exchange of identity information.
The new system would be more convenient as the recent guidance includes a travel rule, which requires virtual asset providers (VASPs) to transmit originator and beneficiary details during transfers. Cryptocurrency exchanges like Coinbase and Circle are also looking forward to finding a solution to the problem that CipherTrace and Shyft are tackling.
CEO of CipherTrace, David Jevans, said,
“We’re kind of taking the next generation view of it, which is One, it shouldn’t be in clear text, it shouldn’t be available for everyone to look at.Two, you should be using blockchains to do it. And Three, all of the stuff we’ve learned from zero knowledge systems can be applied.”
Jevans also added that the product has been in development for the past year, while the company has been talking to the FATF and other regulators. The product reportedly received some initial interest, but most of the attention was given to the finalization of the guidance.
The CTO of Shyft, Chris Forrester, also commented on the collaboration. She said,
“This type of thing in a governmental system, where you already are sort of starving for resources and basically anything above what’s happening right now, is a great thing because it enables better services for all.”
CipherTrace and Shyft haven’t revealed a timeline for the ledger, yet. However, Forrester said that they were ahead of the curve. She added,
“It would be difficult if you’re starting it right now and trying to respond in a matter of months.But the fact is is that we’ve built our particular tech docs and thus the partnerships that we’re forging and something much a way ahead of time, and so we’re pretty much ready for this type of shift.”