BNY Mellon Partners with Chainalysis to Track Users' Crypto Transactions

Bank of New York (BNY) Mellon has announced a partnership with blockchain data platform Chainalysis to help track and analyze cryptocurrency products. BNY Mellon is the world's largest custodian bank, currently managing $46.7 trillion in assets.

Chainalysis is a blockchain data analysis platform that provides services to traditional financial institutions and makes it easier for large companies to manage the legal risks posed by cryptocurrencies. As part of the partnership, BNY will leverage Chainalysis software to track, record and leverage crypto asset data.

The risk management software offered by Chainalysis includes KYT (Know Your Transaction), Reactor and Kryptos, the most important of which is the KYT flagging system - which automatically detects whether a cryptocurrency transfer is considered "high risk".

If the KYT software detects that cryptocurrency is being transferred to a sanctioned wallet address, it can preemptively block the transaction. Reactor provides companies with further investigative powers on the blockchain, while Kryptos collects and transforms complex data into trusted information for institutional use.

Speaking about the partnership, Caroline Butler, global head of custody, tax and network management at BNY Mellon, emphasized the importance of ensuring trust as the bank enters the digital asset space:

“At BNY Mellon, we enter the digital asset market with the title of most trusted asset service provider. Partnering with Chainalysis and other leading fintech firms, we are developing our capabilities in the growing cryptocurrency industry and Shown in our products."

While the services offered by Chainalysis have been criticized by more privacy-oriented crypto users, its ability to provide key monitoring services to large corporations could help legitimize the adoption of cryptocurrencies in traditional finance.

“Chainalysis has always believed that financial institutions are critical to the overall growth and success of the cryptocurrency industry,” Chainalysis co-founder Jonathan Levin said in a statement.

BNY Mellon's foray into the cryptocurrency space began last February, when it announced plans to hold, transfer and issue bitcoin and other cryptocurrencies on behalf of clients as an asset manager.

This fits with a broader trend in traditional finance that is embracing the concept of cryptocurrencies, with household names such as Morgan Stanley, Citibank and JPMorgan Chase all now managing and actively investing in cryptocurrencies.

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