Automated Compliance on Ethereum Sets New High for Global DeFi Services
Consensys’ launch of the first automated and agile regulatory and compliance solution for cryptocurrency and digital assets to run on Ethereum 2.0 could trigger a race on various fronts even as decentralized finance (DeFi) gains traction.
Dubbed Codefi Compliance, and to support the much-anticipated Ethereum network upgrade that will exponentially increase transactions per second and enable the platform scale, this next-generation solution for anti-money laundering (AML) and countering the financing of terrorism (CFT) seeks to ensure digital assets meet regulatory expectations without compromising market and business requirements, regardless of jurisdiction and design.
Ensuring better ways to protect funds has been of concerns to many users in the sector going by series of security and market events in the past with audits, strict security reviews, and open source architectures expected to help. Codefi Compliance seeks to ensure that digital assets meet regulatory expectations, fulfill market and business requirements, and build trust in digital assets by delivering reliable AML, and CFT solutions using know-your-transaction (KYT) mechanisms to protect against fraud and financial crimes.
From the U.S. to Asia and Europe, the growing spate of blockchain projects offering financial services without any human involvement is getting popular. Their benefits may have been appreciated in many aspects but some bad eggs still remain which is what the Codefi blockchain operating system for commerce and finance built to optimize business processes and digitize assets and financial instruments is set to rid.
“Providing robust AML/CFT compliance for Ethereum-based digital assets is a keystone step in bringing the institutional financial industry to decentralized finance,” says Lex Sokolin, the Global Co-Head of ConsenSys Codefi. “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.”
While this is a good development for the blockchain space, its being the first and only compliance solution designed exclusively for Ethereum-based assets and built by ConsenSys, the leader in Ethereum development, pushes the network’s domineering strength in blockchain-based finance farther and sets a new high. To compete in the same space, other platforms offering DeFi services – especially from Asia- would have to brace up for the challenge to contest with Codefi’s combined elements of digital assets and tokenized securities, crypto payments processing, enterprise finance blockchain, and the emerging frontier of DeFi to build a global software enabler for the new financial infrastructure.
Codefi’s four core modules include its use as a platform to create, issue, and manage the lifecycle of digital assets, associated markets, and digital financial instruments on public or permissioned blockchain networks; and to send, receive, and manage cryptocurrency payments and revenue within a single dashboard.
It is also a suite of tools that enables the utilization of tokens and participation in decentralized networks as well as serves as a data, analytics, and risk management engine for digital assets, public blockchain tokens, and their growing networks.
According to Consensys, Codefi Compliance currently uses a custom framework to provide an AML/CFT solution to support over 280,000 types of digital assets on the Ethereum network. It is compatible with Ether and token standards such as ERC20, ERC721, ERC179, ERC777 and notable stablecoins like DAI, USDC and USDT Tether.