Moody’s and Elliptic announced a joint initiative to develop a risk screening system for virtual asset service providers (VASP) that combines and analyzes on- and off-chain data.
Moody’s, a global credit rating agency, and Elliptic, specialists in blockchain analytics and compliance, announced the collaboration. The companies intend to integrate their resources into a single system that will create more accurate tools for analyzing digital assets and effectively monitoring VASP risks.
The solution being developed will combine on-chain data, such as transaction histories, with traditional off-chain data, such as financial records and regulatory databases. This approach will provide a comprehensive view of VASPs and assess whether a particular crypto entity is compliant with regulatory requirements and AML standards.
The solution will be based on Elliptic’s Holistic technology, which supports 43 blockchains within which VASPs will be evaluated. The Elliptic Holistic database contains more than 1,000 VASP profiles and uses advanced technology to monitor transactions to identify potentially illicit activity. Moody’s will supplement the system with information on over 21 million risk profiles and 51,000 sanctioned entities to make the analysis more comprehensive.
According to James Smith, Co-Founder of Elliptic, the solution being developed will help traditional financial institutions dealing with digital assets adapt to new AML and KYC requirements. Danielle Ferry, Compliance and Third-Party Risk Market Manager at Moody’s, added that the new tool will help address the global challenges of the emerging digital economy by enabling TradFi participants to safely expand their businesses.
Last year, Moody’s analysts introduced the Digital Asset Monitor (DAM), an AI-based service to predict depegging of stablecoins in relation to the underlying asset.
