The Wyoming Division of Banking has turned to blockchain analytics firm Chainalysis in an effort to combat cybercrime, money laundering and other criminal activities.

Wyoming to Work Closely with Chainalysis

The news of the partnership was announced on Chainalysis’ blog on Sept. 17. According to the blog post, the blockchain analytics firm will help the division strengthen its monitoring capabilities that it uses for tracing illicit activities pertaining to digital assets.

The Wyoming regulator will be using Chainalysis products and tools “to verify Wyoming banks’ compliance with anti-money laundering, Bank Secrecy Act, Know-Your-Customer, and sanctions.’’

The news of the partnership came just a day after the U.S. State of Wyoming granted the banking charter to the major cryptocurrency exchange Kraken.

Software for Verifying Wyoming Banks’ Compliance

The Wyoming Banking Board approved the application of Kraken to form a Special Purpose Depository Institution (SPDI) and allowed the exchange to develop a bank in the State of Wyoming.

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This is a significant step for the crypto space as Kraken becomes the first regulated cryptocurrency bank in the history of the U.S. With the Chainalysis partnership, however, it is clear the state also wants to maintain control and monitor closely crypto transactions.

BeInCrypto previously reported on how blockchain analytics firms provide insights to identify real-world threat actors, with Chainalysis stating that it could map addresses to real-world entities and further explaining:

“So that means, when you are in our product you can see that someone at Coinbase just sent X number of Bitcoin to someone at Kraken, or to a darknet market or to a child pornography site, or any number of services or entities on the blockchain. The way that we map it is through proprietary heuristics. It’s a combination of technology […] and actual people who work at our company and validate certain services.”

Wyoming at the Forefront of Crypto Regulation in the U.S.

The partnership with Wyoming is said to be a one-year agreement, during which time the blockchain analytics firm will train senior examiners at Wyoming on crypto tracing practices.

The Division will also be granted two monitoring software licenses to the Division of Banking as well as investigatory support as it eases into its new crypto-facing compliance duties.

In the meantime, Wyoming has been at the forefront of digital asset regulation in the U.S. ever since 2018.

Just last year, the Wyoming Legislature authorized the chartering of SPDIs as a new bank charter, and also established a legal framework for digital asset custody and fiduciary activities.

Currently, Wyoming is working on developing regulatory policies revolving around crypto assets, so that digital currencies can be monitored and transacted in a secure way.

Wyoming Division of Banking is working to find a middle ground between crypto and traditional banking institutions, and it seems to have progressed and succeeded in integrating both, starting with Kraken crypto exchange.