Chainalysis CEO and co-founder Jonathan Levin told How Blockchain Moved From the Periphery to Financial Infrastructure and Became Bankable
Put this under items that were off limits two years ago: As blockchain technology develops, so does its potential for legal, widespread application.
Chainalysis CEO and co-founder Jonathan Levin told Karen Webster, “Banks are in the state where they are thinking about blockchains as public infrastructure that they need to rely on.”
Levin specifically stated that, at least since Chainalysis started in 2014, the use of stablecoins is among the biggest changes in blockchain technology. The change has been enormous. These days, hundreds of billions of dollars are housed in conventional financial institutions like banks or the US Treasury, but they also flow across blockchains.
That wasn’t an idea when we launched the company in 2014,” he remarked. Blockchains with native cryptocurrency tokens were the only ones that qualified as cryptocurrency. The U.S. dollar is among the many financial assets that individuals are currently placing on the blockchain.
However, there are still issues with international policy frameworks and incorporating on-chain ecosystems with contemporaneous innovations like artificial intelligence.
According to Levin, there is a drive for a federal framework for stablecoins, which is crucial for industry confidence.
He added that as the discussion surrounding crypto regulation develops, it will become increasingly important to provide clarity, compliance, and insight. “Without a federal framework, it is incredibly difficult for financial services firms and international enterprises to really get comfortable in using stablecoins at scale,” he said.
The Rise of Stablecoins and Changing Adoption Patterns
The goal of blockchain analytics business Chainalysis’ CEO founding was to shed light on the customarily opaque realm of bitcoin transactions. Now, more than ten years later, it has a dataset covering 70 countries that can offer profound insights into the use, abuse, and regulation of cryptocurrency.
Tracking actual dollars instead of just cryptocurrency tokens has expanded the scope of blockchain monitoring in relation to the rise of stablecoins. According to Levin, this development has made blockchain a commonplace part of financial infrastructure rather than a specialized technology.
He stated, “With the guidance from the SEC and OCC, we are beginning to see that this is something that banks will be able to do.”
On these rails, we now monitor not only cryptocurrency tokens but also actual dollars that are used to settle financial transactions, remittances, and payments worldwide.
The purported usage of cryptocurrencies in illegal activity is still a common critique, and fraud and scams continue to be distinct issues. According to estimates from Chainalysis, frauds include between $10 billion and $12 billion in bitcoin transactions every year.
According to Levin, Chainalysis CEO is in a unique position to track the complete “supply chain of scam activity,” providing information on how con artists acquire equipment and deliver illegal services.
Over $10 billion worth of cryptocurrency assets from illegal proceeds have been seized by the government with our assistance,” he stated.
The fight against the use of stablecoins and cryptocurrencies for financial crimes like money laundering has also advanced.
“In reality, the percentage of cryptocurrency transactions that we have been able to associate with those kinds of activities is lower than the total activity,” he stated. “It was substantially higher at first, but it is now consistently less than 1% of the transactions that we can directly link to these kinds of actors.”
Compared to many traditional financial systems, this drop can be attributed in large part to better regulation and the capacity of blockchain monitoring technologies to assist spot unlawful transactions more precisely.
Charting the Future of Blockchain Technology
The potential for AI to enhance crypto knowledge and compliance is one area of interest for all parties involved in the Web3 ecosystem. Even with the progress blockchain has achieved so far, there are still many misconceptions regarding the opacity of the technology.
“Even those who are promoting the technology don’t also support the idea that cryptocurrency has proven to be a far more useful tool for businesses to detect suspicious activity, remove bad customers from their platforms, and enable law enforcement to hold scammers accountable,” Levin stated.
Chainalysis itself is spending money on teaching businesses about blockchain technology and employing artificial intelligence to make difficult ideas easier for regulators and business stakeholders to understand.
“I have a lot of hope that AI will be able to put some of the transactions and ideas into context for people,” Levin stated.
He went on to say, “We still have work to do.” However, the advancement is genuine. And there is a ton of promise.
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