RegTech firms applying blockchain technology want to tackle the issue from its core. The purpose is to produce data that is transparent as well as a distributed ledger to make it accessible for internal use.
Fremont, CA: Regulatory Technology (RegTech) means technology-based services that help organizations with their regulatory compliance obligations, by which these services generally utilize cloud computing solutions and are delivered via the Software as a Service (SaaS) distribution model. The emergence of RegTech emphasizes the need for technological assistance to support organizations in their regulatory compliance efforts.
Let us look at the contribution of blockchain in Regtech:
To begin with, Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations for client onboarding are the most common use cases for blockchain applications in RegTech. Many companies try to handle this area since all financial institutions need to gather their own data on potential clients before they can start doing business with them. This data requires to be updated regularly for existing counterparties. It is indeed very time-consuming and also expensive with regard to both resources and money spent.
When it comes to cryptocurrencies, several firms have developed AML software designed to Bitcoin and other crypto transactions, which monitor activity as well as enable enhanced due diligence. At the same time, blockchain can solve the digital identity crisis.
Monitoring is another use case due to the increased transparency blockchain offers. This is also an obvious application in the blockchain world. The monitoring of transactions in cryptocurrency has increased the utilization of virtual currencies for money laundering. However, blockchain offers better traceability as well as faster analysis wherever assets are digitalized.
Record Keeping Made Easy
One of the biggest problems of Big Data is that, in many cases, the huge collection of information has led to huge amounts of unstructured data that has little to no use. While this presents a lucrative field for companies with different approaches, RegTech firms applying blockchain technology want to tackle the issue from its core. The purpose is to produce data that is transparent as well as a distributed ledger to make it accessible for internal use.
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