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Four Key Applications of Blockchain Technology in Regtech

Banking CIO Outlook | Monday, December 27, 2021

Regtech enterprises using blockchain technology try to address the problem at its source, which is an appealing field for businesses using various ways.

Fremont, CA: Blockchain is one of the technologies that is propelling the regtech revolution. Owing to the many potential benefits of blockchain technology, including increased transparency due to a distributed ledger, faster and more cost-effective via automation, enhanced security via cryptography, and improved record-keeping, regtech businesses apply blockchain technology to a variety of use cases. Here are four applications of blockchain technology in regtech:

Monitoring            

Monitoring is the second apparent use case because of blockchain's increased transparency. In the blockchain world, this has a specific application: monitoring cryptocurrency transactions, which is especially important given the rising use of virtual currencies for money laundering. At the same time, blockchain provides greater traceability and faster investigation wherever properties are digitalized.

Regulatory Fund Management

Asset tokenization in the fund business is another instance of blockchain technology in action. Because of the influence of automation, smart contracts provide an invaluable benefit, but they also cover important bases for regulatory reporting and real-time compliance with a fund's regulatory requirements.

Record Keeping

The fundamental problem with Big Data is that it has resulted in large amounts of unstructured data that is useless in many cases. Regtech enterprises using blockchain technology try to address the problem at its source, which is an appealing field for businesses using various ways. The idea is to build open data and a distributed ledger that can be tracked internally for auditing purposes and kept safe from prying eyes.

Anti-Money Laundering, Client Onboarding, and Fraud Prevention

Anti-money laundering (AML) and Know Your Customer (KYC) rules for client onboarding are obvious use cases for blockchain applications in regtech. All financial institutions must collect data on potential customers before they may do business with them. Furthermore, this data must be updated regularly for current counterparties. This is a time-consuming and expensive procedure in terms of both resources and money invested.

The ideal solution would be a universal ledger that all banks could use to categorize their customers and track transactions. However, as shown by the continuing battle between several blockchain consortia attempting to set universal standards, this is difficult to achieve.

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