BCFN Pioneering Much Needed Cryptocurrency Safety Solutions

Published on: September 11, 2021
Author: Amy Liu

Cryptocurrency Safety Is Becoming More Important

This month, the crypto market surged past the $2 trillion valuation mark, hitting $2.53 trillion on Friday, close to the record high set in May. However, as the value of cryptocurrency in circulation continues to climb, so do the number of reported cryptocurrency safety breaches and fraud cases.

2021 has not only been a breakout year for cryptos. According to a newly released report from Crypto Head, there have been 32 reported hacking incidents and fraud totalling $2.99 billion so far this year. At this rate, we are on course to blow past the 38 cases recorded in 2020 and 27 logged in 2019, causing many investors to question cryptocurrency safety.

The average haul from these crypto hacks is just over $93 million; however, that’s just the tip of the iceberg. In one dramatic case from this year, a hacker infiltrated Poly Network, making off with close to $600 million before engaging the network in strange and convoluted payback negotiations, which saw more than half of the stolen crypto returned and the rest remaining in a crypto key hostage situation.

The most common targets are digital wallets and crypto exchanges, accounting for 126 occurrences over the last ten years. Attacks on DeFi – short for decentralized finance – platforms were tied with fraud at 41 cases each over a ten-year period. However, Crypto Head crypto technical writer James Page notes, “…the number of DeFi breaches is on the increase, with this new technology more open to potential weaknesses.”

Crypto May Not Be the Money Laundering Bad Guy It’s Made Out to Be

Regulators across the board are crying foul on cryptocurrencies, claiming that it is just another tool enabling criminals to launder ill-gotten gains from criminal operations. And as the value of crypto rises, so does the demand for increased oversight.

Globally, governments are looking for ways to implement the kinds of regulatory checks and balances that exist in traditional centralized financial markets, citing the need to counter criminal activity and terrorism. However, in a $2 trillion-plus crypto market, just how prevalent is money laundering?

According to a recent report, 270 blockchain addresses were responsible for 55% of all reported crypto-related money laundering. To put that number into perspective, some estimates have the number of active blockchain wallets at over 64 million.

However, despite the relatively low rate of criminal activity, increased crypto regulation remains a hot topic issue for authorities. The US Financial Crimes Enforcement Network (FinCEN) is pushing to have crypto transactions be subject to the same anti-money laundering reporting requirements as other financial institutions, which requires all transactions over $3,000 to be recorded and users to be verified.

While all efforts to prevent money laundering should be considered, cash remains king when it comes to illicit activity. Companies need to stay diligent in their efforts to monitor and recognize conventional cleaning methods.

One way to make this gargantuan task a little easier is by employing digital solutions to help automate ID checks and verification requirements. A single global platform, for example, could not only simplify proof of identification but it would also make recognizing and tracking suspicious activity easier.

Governments Are Trying to Regulate Cryptocurrency Better

Throughout the European Union, citizens are pressing their government to increase oversight and cryptocurrency safety. Many are even going a step further, supporting the creation of national digital currencies distinct from the Euro. This all according to a recent landmark poll of over 31,000 EU citizens in 12 countries carried out by Redfield & Wilton Strategies.

The poll also found that the majority of EU citizens were in favour of independent country oversight where cryptocurrency financial regulations are concerned, compared to only 25% who prefer the current EU decision-making model.

These results could be significant as the European Commission considers new crypto-related regulatory legislation and the ECB actively explores launching a digital euro.

Cryptocurrency Safety and Regulations Are Coming

In Australia, the parliamentary committee is working out how to balance the need for some form of cryptocurrency regulation with the desire not to hamper pioneering innovation in the crypto market, which the government sees as a potential “trillion-dollar industry.”

Chair of the Select Committee on Australia as a Technology and Financial Centre, Senator Andrew Bragg, has said that while he believes there are inherent risks in the crypto market, there is also significant opportunity. Excessive alarmism may cause consumers more harm than good.

Bragg recently chaired a committee looking into popular buy now pay later (BNPL) services like Afterpay and Zip. Consumer advocates were demanding that these types of financial services be governed under the same laws as credit companies. However, the committee rejected that argument recommending instead that the industry adopt a self-regulatory stance.

Commenting on the decision, Bragg said, “I think we had a good review into BNPL. In terms of these issues I think the benefit is more choice, more efficiency, and less dead weight – these are all good things for our society, and that’s why I’m keen to get it right.”

In what may have been construed as an endorsement of the BNPL brand of retail credit, lax industry regulation may have paved the way for one of the largest corporate takeovers in Australian history after Square recently announced plans to acquire Afterpay in a deal worth $39 billion.

Blockchain Foundry Launches the Peregrine Compliance Tool to Enforce Cryptocurrency Safety

Cryptocurrency safety pioneer Blockchain Foundry Inc. (CSE: BCFN) very recently announced the launch of an MVP pilot of Peregrine, a first of its kind digital asset compliance tool. Using the tool, operators of security tokens, stablecoins, Central Bank Digital Currencies (CBDCs), NFTs, and other digital assets can apply custom rules sets and compliance regulations to any digital asset transaction.

As Peregrine development continues, plans are in place to enable users to implement templates for token transactions modelled after existing securities regulations. Peregrine will develop templates based on North American financial and securities frameworks like Canadian Securities Administrators (CSA), the SEC, FINRA, FINTRAC, and FinCEN for its initial commercial deployment.

Peregrine will incorporate Blockchain Foundry’s innovative Transaction Compliance Enforcement Fingerprint (TCEF) technology. This feature allows regulators to validate the rule sets in force at any point in time and their specific configurations. TCEFs are deep rooted to the blockchain, providing enforcement officers with confidence the data they are being presented with is accurate and hasn’t been manipulated.

The tool will also include Blockchain Intelligence Group’s BitRank Verified® technology, which allows transactions on the network to be screened for potentially fraudulent and illicit activity. This optional add-on feature runs wallet address through the software’s AML/Fraud/CTF compliance and criminal activity checks, generating risk scores. Users will have the ability to ban those with scores below a predetermined threshold.

Peregrine has the potential to provide the crypto market precisely what it needs: the ability to reduce criminal or fraudulent activity without the need for suffocating regulatory oversight.

About Blockchain Foundry Inc.       

Blockchain Foundry develops and commercializes blockchain-based business solutions and helps corporate clients incorporate blockchain technology into their businesses. Their software solutions are at the forefront of crypto safety and security in areas such as DeFi, payments, and NFTs.

Disclaimer: The company described in this article is a customer of NAI Interactive Ltd. This material is for informational purposes only and is not intended as a recommendation or offer or solicitation for the purchase or sale of any securities or financial instruments, or for transactions involving any financial instrument or trading strategy.

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