Blockchain Compliance Tools

🔐 Balancing Privacy and Compliance in Blockchain? Meet REGKYC 🔍 I highly recommend reading this recent paper: “REGKYC: Supporting Privacy and Compliance Enforcement for KYC in Blockchains” KYC and AML compliance have long been sticking points for blockchain adoption in regulated environments. This paper presents REGKYC, a privacy-preserving Attribute-Based Access Control (ABAC) framework designed to reconcile user privacy with regulatory enforcement. 💡 Key Contributions: ✅ Structured ABAC model for flexible KYC attribute verification 🔐 Preserves user privacy while enabling regulatory compliance 🧩 Allows CASPs to tailor policies to evolving jurisdictional requirements 🕵️♂️ Enables authorized deanonymization in the event of malicious activity REGKYC offers a compelling vision for compliant and privacy-preserving DeFi — an area that’s becoming increasingly important as institutions and regulators engage with blockchain ecosystems. 📘 Worth a read if you're exploring the future of on-chain compliance, ZK-based privacy, or regulatory frameworks in crypto. Kudos to the authors for a thoughtful and timely contribution! 👏 William Knottenbelt Michael Huth Xihan X. Let me know if you're working on anything similar — happy to connect and exchange ideas.

Yesterday, my former office, NYS DFS, issued new industry guidance on the use of blockchain analytics tools for banking institutions. According to DFS, “as banking institutions experience increasing interest in and exposure to virtual currency activities, blockchain analytics tools have the ability to enhance compliance programs and prevent illegal activities.“ According to the Guidance, all NYS regulated banking entities are expected to consider incorporating blockchain analytics as an additional risk-management tool.  “Applicable use cases may include:   Assessing risk exposure through customer wallet screening and funds verification involving virtual asset service providers (“VASPs”); conducting holistic monitoring for illicit activity exposure and risk management of third parties; augmenting due diligence controls to evaluate expected versus actual activity, such as dollar thresholds, of customers engaging in virtual currency activity; and weighing the risks associated with a virtual currency product or service to be offered.” The new Guidance can be found here: https://lnkd.in/eipamg-N

Free Resource Friday! GitHub doesn't get enough credit as a compliance resource, and I think that's because most folks don't know what to search for. There are free, open-source blockchain analysis tools — address clustering scripts, transaction tracing tools, wallet labeling datasets — that do a lot of what commercial platforms charge significant money for. But honestly, the AI side of GitHub might be even more useful right now. There are free large language models, document review tools, anomaly detection scripts, and NLP-based tools that are directly applicable to compliance work — think transaction monitoring, SAR narrative drafting assistance, policy document analysis, and fraud pattern recognition. A lot of cutting-edge research gets published there before it ever becomes a commercial product. If you've got someone on your team comfortable with Python, it's worth a few hours of exploration. The community building these tools is doing serious work, and none of it costs anything to access. github.com — search "blockchain analytics," "AML detection," "compliance AI," or "financial crime" #FreeResourceFriday #CryptoCompliance #AI #AML #OpenSource

"𝗨𝗻𝗹𝗼𝗰𝗸𝗶𝗻𝗴 𝗖𝗼𝗺𝗽𝗹𝗶𝗮𝗻𝗰𝗲: 𝗘𝗥𝗖-𝟯𝟲𝟰𝟯 𝗣𝗶𝗼𝗻𝗲𝗲𝗿𝘀 𝗥𝗪𝗔 𝗧𝗼𝗸𝗲𝗻𝗶𝘇𝗮𝘁𝗶𝗼𝗻 𝘄𝗶𝘁𝗵 𝗧𝗿𝗮𝗻𝘀𝗮𝗰𝘁𝗶𝗼𝗻 𝗢𝘃𝗲𝗿𝘀𝗶𝗴𝗵𝘁" 🚀 ERC3643 Association introduces a new UI plug-in tool for #DeFi protocols to enforce compliance with the ERC3643 standard, also known as the T-REX standard, an extension of ERC-20. 🛠️ ERC3643 tokens are permissioned and use #smartcontracts to define conditional transfer functions, allowing #decentralized validators to approve transactions based on predetermined rules, particularly for regulated #assets like securities. 🔒 The collaboration between ERC3643 Association, DevPro, and Tokeny led to the development of the UI tool, enabling ERC-20-compliant DeFi applications to interact with permissioned ERC-3643 tokens, covering various assets including #realworldassets, token securities, loyalty tokens, stablecoins, and CBDCs. 🤝 ERC3643 embeds compliance rules at a token level, ensuring interoperability with ERC-20-supporting applications while denying transactions if counterparties fail to meet compliance requirements. 🔄 Unlike other standards using wallet whitelisting for KYC checks, ERC3643 utilizes digital identity and verifiable credentials for user whitelisting, ensuring on-chain compliance validation while protecting privacy by publishing only proofs of verification on-chain. Companies such as APEX Group and Aztec Group are exploring this technology. 🔍 Source : https://lnkd.in/e7rtSFib Gregory Stone, Ken Chapman, Luc Falempin, Dennis O'Connell, Ivie S., Kostiantyn Dmitriiev, Joachim Lebrun, Sunny Jiang, Herbert Si, Hubert J.P. Jolly, Arijit Das, Collin Sellers

🗽Today, New York State Department of Financial Services released new guidance urging banks and other covered financial institutions to leverage blockchain analytics like TRM Labs to manage risk tied to digital assets. The guidance, which builds on DFS’s 2022 guidance on blockchain analytics, is classic DFS - concise and straight to the point - making it clear that blockchain analytics should now be part of the compliance toolkit for any bank with customers transacting in digital assets. So what does that look like in practice? DFS lays out a number of ways institutions should be thinking about deploying these tools: 🔍 Screening wallets of customers who have disclosed or engaged in crypto transactions to assess risk exposure ✅ Verifying sources of incoming funds that originate from VASPs 🌐 Monitoring the broader ecosystem to evaluate customer exposure to money laundering, sanctions, or other crimes 🤝 Identifying and assessing third-party risk, including counterparties of customers 📊 Comparing expected vs. actual behavior (like transaction thresholds) of crypto-active customers 📈 Using intelligence from holistic monitoring to refine risk assessments and risk appetite ⚖️ Evaluating risks for new products or services tied to virtual currency activity DFS is careful to emphasize that these are not one-size-fits-all mandates. Each institution is expected to tailor controls to its own risk profile, business model, and operational footprint — and update them regularly as new technologies, customer types, or counterparties emerge. DFS ends with this: "With increasing virtual currency adoption, Covered Institutions play a critical role in safeguarding the integrity of the financial ecosystem to prevent illicit activities like money laundering, terrorist financing, and sanctions evasion." I agree. 

ERC-3643 in plain English: 5 things it actually does that ERC-20 alone cannot. If you're tokenizing a security, this is the standard you're working in. Here's what it really is. 1. It checks identity, not just balances. Every wallet has to be tied to an onchain identity that a trusted issuer has signed off on. No identity, no transfer. ERC-20 has no idea who you are. ERC-3643 does. 2. It blocks transfers to non-KYC'd wallets at the contract level. Compliance isn't a screenshot from a spreadsheet somewhere. It's a function call that reverts. If the receiver isn't on the registry, the transaction fails. 3. It runs rule modules, not one frozen ruleset. Holding caps, lock-up periods, jurisdiction limits, accredited-only gates. Each one is its own module the issuer can plug in, swap, or retire as the regulatory frame moves. 4. It lets the issuer recover and force-transfer when the law says they have to. Lost keys, court orders, sanctions updates. A real security has to be recoverable. A bearer token isn't. 5. It freezes wallets and pauses the asset when something goes wrong. Frozen at the wallet level for one bad actor. Paused at the asset level for an incident. Both are table stakes for the regulators reviewing the deal. The result? ERC-3643 isn't ERC-20 with a KYC sticker on it. It's a different contract type for a different legal object. A security token on ERC-20 alone is a compliance violation waiting for a transfer agent to find out about it. Most teams skip this part. They treat the identity registry, the claim issuers, and the compliance modules as the real product surface. Not the token. The control plane around the token. That control plane is what lets legal counsel, the transfer agent, and the institutional buyer all sign off on the same asset. Without it you have a chart. With it you have an instrument. Pick the standard that matches the legal object you're actually issuing. 👉 Follow Tony Drummond for daily web3 insights.

We shouldn’t have to choose between protecting people’s privacy and stopping bad actors. In my new article (based on my research under peer review), I share how a privacy‑first blockchain analysis framework can do both 1) Boosting detection 2) Cutting false positives while staying fully GDPR/CCPA/DPDP compliant, all in real time. The goal is simple: reduce wasted effort, catch more laundering, and earn back customer trust without compromising anyone’s privacy. #AML #Privacy #Blockchain #RegTech #FinCrime #Compliance #BankingInnovation #DPDP Algorand Foundation AlgoBharat The Digital Economist Chainlink Labs

Had a great conversation with Wyatt Khosrowshahi at Castle Island Ventures on the On the Brink podcast. And better yet, we were able to do it in person in Boston! The timing could not have been better with crypto regulation passing this week in DC. People often ask why I care about blockchains in the first place. It's because I believe that they offer the world a better global financial settlement system than the one we have today. We've seen a lot of news lately that financial institutions and fintechs are exploring and adopting stablecoins for payments and trade settlement. For me, the natural question is: how do you manage the thorny compliance risks in open and permissionless system? And that’s where Predicate comes in. We enable programmable policies for blockchain transactions, making it possible to enforce robust risk management requirements without compromise. It's an exponential step up from what we can do in web2 today. Some key topics Wyatt and I explored: - How Predicate infrastructure helps scale and secure blockchain applications, with a focus on our work with Paxos and Plume - Why compliant stablecoin transfers are essential for mass-market adoption across regulated markets - How enterprises, both financial and software, can integrate policy frameworks into everyday workflows - What the future of secure money movement might actually look like when built on blockchain primitives It was a privilege to share the vision behind Predicate and how we’re building toward a world in which robust compliance in blockchain systems is a reality. 🎧 Listen here: https://lnkd.in/dEm8Vwpt #crypto #DeFi #stablecoins #compliance #Predicate #blockchain #policy

Blockchain analytics just went from innovation to expectation. #NYDFS now treats these tools as baseline controls for any bank or #FinTech exposed to virtual currency. On September 17, 2025, the New York Department of Financial Services issued an Industry Letter making clear: if you’re a banking organization in New York with exposure to virtual currency, even indirectly through your customers, regulators expect you to be using blockchain analytics as part of your compliance program. This is not a new regulation. But it is a signal that DFS is treating blockchain analytics as a baseline control for AML, sanctions, and broader risk management. Wallet screening, source-of-funds verification, VASP due diligence, and anomaly detection are no longer “nice to have.” They are compliance expectations. For FinTechs, banks, and VASPs alike, the message is clear… the tools and intelligence once seen as innovative are rapidly becoming regulatory minimums. Examiners will ask “What analytics are you using? How are you documenting decisions? How is this embedded in your risk framework?” And you will need to prove it with comprehensive documentation. The compliance frontier is shifting. Firms that wait to integrate blockchain analytics until compelled will be at a disadvantage, not just in exams, but in building the trust that regulators and counterparties now demand. Full DFS Letter here: https://lnkd.in/e6WFvntQ #FinTech #Blockchain #CryptoCompliance #VirtualCurrency #DigitalAssets #BlockchainAnalytics #Web3Compliance #FinTechLaw #RegTech #PolicyUpdate #LegalTech #RegulatoryChange #FinTechPolicy #ComplianceLaw #BankingInnovation #FinancialServices #FutureOfFinance #CryptoRegulation

🚨 Cryptocurrencies & Blockchain: A National Security Imperative 🚨 Blockchain and crypto are reshaping global finance, data management, and national security. Their decentralized, transparent, and secure design offers huge benefits, improving auditability, reducing redundancies, and strengthening the traceability of sensitive operations. U.S. defense agencies are already investing in blockchain to secure critical data and enhance operational efficiency.🔗 But these same features introduce real risks. The anonymity and speed of crypto transactions make them attractive for illicit activities, money laundering, ransomware, and terrorist financing. Billions have moved through crypto for illegal purposes, challenging law enforcement and national security worldwide. In recent conflicts, cryptocurrencies have enabled both legitimate fundraising and sanctions evasion, undermining critical diplomatic tools. 🕵️♂️💸 To lead and protect national interests, governments must: *️⃣ Invest in blockchain research & talent *️⃣ Develop robust, adaptive regulatory frameworks *️⃣ Foster international collaboration for AML & CTF standards *️⃣ Support public-private partnerships to align innovation with security priorities 🌍🤝 How Merkle Science is Making a Difference: 👉🏽 Merkle Science’s AI-powered risk intelligence platform helps governments, crypto businesses, and financial institutions detect, investigate, and prevent illicit crypto activity in real time. 👉🏽 The Tracker tool supports law enforcement with advanced crypto forensics, tracing transactions across 10,000+ assets and 200+ bridges, including complex cross-chain and DeFi crimes. 👉🏽 Merkle Science brings these solutions to U.S. Government agencies, empowering them to combat crypto crime and protect national security. 👉🏽 The Compass platform ensures compliance with AML, KYC, and CFT regulations, helping organizations stay ahead of emerging threats and regulatory changes. 👋🏽 Merkle Science’s behavioral analytics and clustering tools enable investigators to identify and attribute illicit activity quickly, even as transnational criminals adopt new methods to hide their tracks. The stakes are high: countries that lag in blockchain and crypto risk losing economic and regulatory influence, while those that lead can set global standards and protect their digital sovereignty. 🌐 Let’s champion innovation, security, and global cooperation in blockchain and crypto. The future of national security depends on it. #Blockchain #Cryptocurrency #NationalSecurity #RegTech #AML #CryptoCompliance #MerkleScience #Innovation #PublicPrivatePartnerships Mriganka Pattnaik Nirmal AK Thibaut Gravelle-Vivien Susrita Sen Vidushi Tiwari Ryan Berndt