Elliptic, a leader in the crypto risk management industry recently announced that they added support for two leading privacy coins, ZEN and Zcash. According to the announcement, this will create new opportunities for crypto exchanges by allowing them to monitor unshielded transactions done with these digital assets.
Why the Support Matters
A major challenge of using privacy coins is compliance. By supporting these coins, Elliptic will make it possible for businesses to adopt them while being compliant. Many privacy coins today are extremely difficult to monitor. With this being said, top exchanges around the globe have been hesitant to on-board these digital assets from a compliance standpoint.
Genesis, a leader in crypto lending and trading will be the first to use the transaction and wallet monitoring solutions for ZEN and Zcash. According to Michael Moro, the Genesis CEO, the platform’s goal is to provide liquidity to all its clients. The CEO noted that Genesis was highly regulated. Consequently, they need to apply the same strict standards to all their assets. He said that the addition of the two assets to the Elliptic platform would be useful to the evolution of their platform. It would help them assess the risk of each transaction and meet the expectations of regulators.
Chief Scientist of Elliptic, Tom Robinson stated that:
"By providing blockchain monitoring support for privacy coins such as Zcash and ZEN, regulated financial institutions can now engage with this important class of cryptoasset in a safe and compliant way. This will help to expand access to privacy coins and support the growth of Genesis and other crypto exchanges that wish to expand their asset portfolio to attract new customers."
In May 2020, Elliptic announced that it had added support for 87 new crypto assets. Today, Elliptic is a leader when it comes to transaction screening solutions. They cover over 97% of all crypto assets by trading volume.
Elliptic’s Success in Blockchain Monitoring
Elliptic has become a leader in the crypto risk management sector. It provides blockchain monitoring solutions for financial firms and crypto exchanges globally. The company has received the backing of major companies such as SBI Group, Wells Fargo Strategic Capital, and Santander Innoventures.
Thus far, the company has successfully done risk assessments for transactions worth trillions of dollars. In those assessments, the company has uncovered transactions related to money laundering, terror financing, fraud, money laundering, and other illicit financial activities. The company’s headquarters are in London, UK. It also has offices in Tokyo, New York, and Singapore.
The Problem with Privacy Coins
Many regulated crypto exchanges do not offer support for privacy coins. Besides that, the authorities are averse to the use of privacy coins. With the lack of transparency that originally existed, exchanges had little reason to pursue most of these digital assets from a risk / reward standpoint.
While many people who use privacy coins are simply doing so to protect their privacy, the coins are also popular with criminals. As a result, an exchange might be under more intense scrutiny if it supports privacy coins.
With the monitoring solutions provided by Elliptic, many exchanges can now confidently list privacy coins without the fear of handling illicit funds. Tools such as the ones created by Elliptic will play a huge role in making authorities more accepting of the crypto sector.
Image Source: Elliptic