CipherTrace Releases DeFi Compliance Solution Built on Chainlink to Abide by OFAC Sanctions Requirements
Because Chainlink is already used widely in the DeFi space, it will make “integrating compliance data as simple as possible for DEX and other protocols.”
Cryptocurrency intelligence company CipherTrace has announced the release of decentralized finance (DeFi) compliance solution.
CipherTrace DeFi Compli is the solution that enables decentralized exchanges (DEXs) like Uniswap, Sushiswap, and other DeFi applications to abide by the Office of Foreign Assets Control (OFAC) sanctions requirements.
Daniel Kochis of Chainlink Labs pointed to the lack of compliance tools in the DeFi sector and that this solution would make “integrating compliance data as simple as possible” for decentralized protocols, including DEXs.
As per the official announcement, the regulatory spotlight is on DeFi because of the growing number of hacks on DeFi protocols.
The company further cites the use of DeFi to launder the funds stolen from the centralized exchanges, such as the $281 million KuCoin hack, as the reason for launching a DeFi compliance oracle service that makes for easy integration with existing DeFi frameworks.
“This oracle delivers CipherTrace’s source-signed compliance data directly on-chain to your smart contract,” reads the description. It covers Ethereum Mainnet, Ethereum Kovan Testnet, Binance Smart Chain Mainnet, and Polygon (MATIC) Mainnet.
“The $40B locked in DeFi protocols puts an even bigger target on DeFi exchanges and protocols.”
“Ensuring that sanctioned addresses cannot use DeFi to fund weapons of mass destruction programs should be among DEXs’ chief concerns right now. CipherTrace’s DeFi Compli regulatory compliance oracle on Chainlink can support DeFi protocols in achieving the compliance needed to ensure crypto’s long-term viability.”
Dave Jevans CipherTrace CEO
Jevans points to Valerie Szczepanik, Head of Strategic Hub for Innovation and Fintech at US SEC’s call for DeFi structures to be subject to various laws, saying, “The time for DeFi to adopt compliance solutions is now, or risk facing the consequences.”
“Szczepanik’s statements suggest imminent enforcement of sanctions as well as AML and CTF laws.”