Chainalysis is rolling out a global compliance solution for Tether (USDT), a Feb. 12 printing release appear. The stablecoin'due south issuer is now able to identify "high gamble" transactions occurring on its network.

The tracking is made possible by Chainalysis' Know Your Transaction (KYT) suite, which allows token issuers to monitor the activity of their assets. The real-fourth dimension Anti-Money Laundering (AML) solution assists compliance efforts past tracking the unabridged chain of a token'south life, from issuance to redemption.

KYT provides both an API and a user interface to rails suspicious activity, with various filtering tools.

Preparing for regulators

Tether representatives did not directly reveal to Cointelegraph why the firm chose to enhance its compliance measures now.

Yet, regulators around the world recently started signaling that stablecoins deserve deeper scrutiny. In October 2022, Financial Crimes Enforcement Network (FinCEN) Director Kenneth Blanco noted that stablecoins are non exempt from complying with AML laws.

For the regulator's purposes, stablecoin issuers are categorized equally coin services businesses (MSB), and have to attach to the regulatory standards reserved for such companies.

Cryptocurrency exchanges are too categorized as MSBs, and accept gradually implemented stricter KYC and AML controls. Just while compliance for an substitution is relatively straightforward — its telescopic is only for the money coming in and out — stablecoin issuers are potentially faced with the much harder task of tracking network action.

Regulating the flow of money in and out of the stablecoin network is relatively simple, yet regulators around the world have ofttimes identified severe risk for stablecoin transactions.

Tracking activity within the network itself may alleviate these concerns. While Tether cannot confiscate the "high risk" tokens directly, it can freeze the wallets that contain them.