Cryptocurrency firms should use blockchain analytics tools to guard against financial risks and suspicious activity, a senior New York state regulator has said.
Adrienne Harris, Superintendent of the New York State Department of Financial Services, says: “Blockchain analytics tools provide companies with an efficient, data-driven way to conduct customer due diligence, monitor transactions, and verify sanctions, among other things, which are essential elements. our regulation of virtual currency.
“We expect regulated entities to use best practices to ensure the safety and security of the virtual currency market and protect consumers.”
In issuing the new guidelines, the watchdog says New York State-regulated virtual currency companies must establish controls that can use blockchain analytics and must have policies, clearly documented processes and procedures regarding how these tools integrated into their control system.
In addition, as part of their customer due diligence responsibilities, companies must obtain and store information about their customers and prospects, using that information to understand and manage risks effectively.
Companies must also implement appropriate controls to monitor and identify unusual activity that is consistent with the risk profile of virtual currency entities and conduct a review of sanctions against online activities.