Stellar Foundation signs a partnership with Elliptic: what does this mean for you and for compliance?
We always bring you the latest news about Stellar partnerships, and today’s story is perhaps the most exciting in the past months. Stellar has partnered up with Elliptic — one of the world’s leading crypto security providers. Read on for details!
We all want mass crypto adoption to come sooner, but there’s an obstacle: the vast majority of businesses in the world still don’t accept crypto. Mass adoption won’t come thanks to DeFi, blockchain games and other dApps along — it needs a willingness on behalf of traditional companies.
One of the things that these non-crypto businesses worry about is the risks and legality of crypto payments. Everyone has heard that Bitcoin and other coins are often used to finance terrorists, launder money, conduct fraud etc. The phrase ‘dirty Bitcoins’ is also popular. Naturally, entrepreneurs worry: will there be consequences if they accidentally accept such a dirty coin? Can it land you in prison as aiding and abetting crime?
The solution is to use a service that monitors crypto transactions and flags those that seem suspicious. It’s true that crypto is mostly anonymous, but you can track the same coin across different transactions and see if it participated in anything fraudulent. This requires a powerful AI, or a neural network.
So, Elliptic is just such a transaction monitoring service. It has an advanced risk scoring system and can easily detect suspicious signs of a fraud. It’s been offered to Bitcoin-based businesses for quite a while — for example, leading crypto payment providers use it. But now it’s finally become available for Stellar.
In their press release, Stellar and Elliptic say that the partnership will allow to detect money laundering partners, collect data to link XLM payments to known fraudulent entities and even learn more about the dark web. The ultimate goal is to boost compliance and Stellar’s standing in the eyes of regulators.
Does this endanger your privacy as a user of the XLMwallet? No, not at all. Compliance and privacy are fully compatible. Nobody is going to put you under surveillance. The partnership refers more to Stellar-based businesses, not to wallets.
Apparently it will be up to each business to decide if it wants the transactions of its users to be tracked and analyzed. So far it’s just for XLM transactions, by the way, and not for other assets issued on the Stellar blockchain. We as the administration of XLMwallet aren’t planning to introduce such monitoring.
However, if you pay with XLM in e-commerce stores or in dApps, you should keep in mind that your payment might be scored for risk by Elliptic. But if you are not involved in any shady activities, there’s really nothing to worry about.
What do you think about Elliptic and its risk monitoring system? Do you find it controversial? Share in the comments!
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