It is time for banks to have a friendly view towards bitcoin. Banking sector has always been a bit sceptical about bitcoin, mainly due to lack of accountability and also due to the threat it poses to the future of conventional banking. Over time, banks and financial institutions have realized the importance of Blockchain technology and the advantages of bitcoin in terms of speed and cost efficiency. Few banks are already invested in finding ways to incorporate Blockchain technology in their everyday operations.
The increasing interest in technical aspects of bitcoin technology hasn’t been of much help when it comes to banks recognizing bitcoin as a currency. Finding a suitable banking partner is still a challenge for bitcoin business in many countries. From a bank’s point of view, they have an obligation to verify the source of money and to ensure that it wasn’t derived by any illegal means. With bitcoin transactions, even though the transaction information can be found on the Blockchain, the wallets associated with them remain anonymous, which makes it hard to identify the owners. The absence of a feasible way to identify the source of bitcoin, puts the banks at risk and it may attract huge penalties from the regulatory authorities if the bitcoin handled has been involved in unlawful/illegal transactions. Now, banks might have found a way to address these issues with Elliptic.
The London-based start-up “Elliptic” might have found a solution for this issue by developing a new software that can identify the origin and the flow of each bitcoin. According to the company, the Elliptic tool created by a bunch of PhD holders is capable of guessing the wallet owner with a high degree of accuracy. The machine learning algorithms used in Elliptic scours the internet and deep web for references to wallets, and uses other digital clues to guess the identity of a wallet owner. Elliptic can be used for real-time verification of bitcoin transactions as well.
Elliptic presents itself as an ideal platform for the banking sector to conduct due diligence and verify compliance with AML regulations for bitcoin transactions. The company plans to release an API by the end of this year and it has about 5 banks already lined up to use Elliptic APIs for AML and KYC implementation. With Elliptic, we can soon expect more banks to support bitcoin.
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