Peer-to-peer (P2P) exchange, Paxful, has announced a partnership with blockchain analysis company, Chainalysis, to enhance security on its platform.
Paxful disclosed the news about the development via an official blog post. The partnership with Chainalysis aims to raise the bar for compliance standards for P2P exchanges.
The announcement further noted that through the new collaboration, Paxful would harness specific solutions from Chainalysis. These will help to boost Paxful’s compliance expertise and set a new global benchmark for P2P cryptocurrency exchanges.
“Through working with Paxful, Chainalysis is evolving its policy and will evaluate P2P exchanges on a case-by-case basis before labeling them as risky, just as it does for other cryptocurrency exchanges,” Paxful CEO, Ray Youssef, said.
Before working with Paxful, Chainalysis used to view P2P organizations as having questionable safety. According to the released statement, the lack of required user data seemed a high compliance risk.
“Paxful is setting a new standard for compliance at P2P exchanges. While Chainalysis is also changing its policy based on the strides P2P exchanges like Paxful have made,” Youssef noted.
The blockchain analysis company is one of the forerunners in the blockchain security industry. The collaboration will also allow the exchange to monitor the transactions in real-time, enabling regulation on suspicious transactions.
Also, with real-time alerts on the highest-risk activity, the Know Your Transaction (KYT) solution will allow compliance teams to focus on the most urgent activity. This will, in turn, lead to better allocation of resources to enforce compliance policies. This will result in Paxful fulfilling regulatory obligations to report suspicious activity effectively.
“Compliance is the key factor for establishing trust in cryptocurrency exchanges,” said John Dempsey, VP Product, Chainalysis. “By adopting a case-by-case approach to evaluating P2P venues, we are helping to broaden trust and transparency across the cryptocurrency ecosystem.”
Notably, KYT is one of the many compliance solutions introduced last April by the New York-HQ firm. Some of the top clients of Chainalysis for this solution include exchanges like Bitfinex and Tether.
“At Paxful, compliance and security are top-of-mind as we work to keep the marketplace free from fraud and scammers,” said Lana Schwartzman, Chief Compliance Officer at Paxful. “Partnering with Chainalysis was a great choice as we work to protect our users and instill in them the importance of regulation and compliance on P2P marketplaces like ours.”
Alliances to boost crypto adoption
Recently, Binance entered into a partnership with Paxful to promote bitcoin adoption, bringing cryptocurrency to the masses.
It is significant because the P2P platform already supports hundreds of payment methods. And Paxful has made clear its mission of expanding into emerging economies to promote crypto adoption.
Currently, Paxful claims to support 167 fiat currencies on its platform. The new partnership with Chainalysis is seen as a step towards adding support for more fiat soon.
I will never use Paxful.