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These bitcoin services in Spain begin to monitor all your transactions

Key facts:

The task will be carried out by the blockchain watchdog, Merkle Science.

The platforms will apply a “smart” regulation against illicit activities.

Bitcoin exchange Criptan and cryptocurrency custody service Onyze, both with operations in Spain, have established an alliance with blockchain watchdog Merkle Science. Now, all the transactions that users carry out on these platforms will be monitored in search of suspicious patterns that show possible illicit activity.

The deal was announced on Tuesday, July 20, by the intelligence company applied to blockchains. Through a statement, the parties reported that they will have several lines of action that include: identifying criminal portfolios, operations with suspicious patterns and preparing so-called “black lists.”

The goal would not only be to detect potential fraudulent operations, but also investigate possible financial crimes committed with cryptocurrencies. It is not clear what is the limit that the companies will have in the investigations since, in any case, the task would correspond, in theory, to the police or criminal investigation agencies.

The amounts related to scams (scams, in the graph) decreased considerably in 2020. Source: Chainalysis.

“The association demonstrates the commitment of these companies to the development of a compatible ecosystem, as digital assets become a key pillar of the financial industry. Smart regulation brings with it further development and innovation within the industry, ”explained Merkle Science in the press release.

Although, for security, the blockchain intelligence company did not disclose how its ‘behavior rules engine’ operates, it should be noted that the surveillance covers all incoming and all outgoing transactions. In other words, users must comply with KYC / AML or “Know your customer” and anti-money laundering controls.

The move of Criptan and Onyze is aligned with the strict regulations that the European Union has issued on operations with bitcoin and other cryptocurrencies. The guidelines for monitoring transactions are also in line with those issued in the past by the Financial Action Task Force (FATF), one of the bodies that has proposed the most regulations towards bitcoin.

Blockchain surveillance, a millionaire business

Intelligence work related to operations on a blockchain is not new. In the market there are companies such as Chainalysis, Elliptic, CipherTrace and Coinbase that offer their services to private companies or government entities to detect possible crimes committed with cryptocurrencies.

It is a multi-million dollar business in which pattern recognition techniques called “heuristics” are used, as reported by CriptoNoticias. Platforms for the P2P exchange of bitcoin, such as LocalBitcoins or Paxful, have announced alliances of this type in the past, such as Criptan, Onyze and Merkle Science.

The United States is one of the most obvious cases in hiring of this type. Agencies such as the Secret Service, the Internal Revenue Service (IRS), the Securities and Exchange Commission (SEC), and even the Army have contracted some type of service related to surveillance in blockchain networks.

Despite all the investigations that are being carried out, a Chainalysis report released in February of this year found that less than 1% of the value moved with bitcoin and cryptocurrencies comes from crimes.

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