Online brokerage app Robinhood Crypto has hired blockchain data platform Chainalysis to provide compliance services and more for users buying and selling cryptocurrency.
Chainalysis provides data, software, services, and research to a variety of organizations in over 60 countries, including government agencies, exchanges, financial institutions, insurance, and cybersecurity companies.
Robinhood Crypto will be using two pieces of software called Chainalysis KYT and Chainalysis Reactor. Chainalysis KYT will help the company flag "risky and illicit transactions in real-time, while Chainalysis Reactor enables deeper due diligence into suspicious activity."
Ben Einstein, head of partnerships at Robinhood Crypto, said Chainalysis works closely with regulators and law enforcement to "develop industry best practices, and that approach is aligned with Robinhood's commitment to working with policymakers in a collaborative manner."
The announcement comes as Robinhood prepares to launch Robinhood crypto wallets, which will allow its users to deposit and withdraw bitcoin, Ethereum, Dogecoin, and more while also connecting Robinhood Crypto customers to the blockchain.
The company began allowing cryptocurrency trading in 2018 and announced the new cryptowallet feature in September. The waitlist for the crypto wallets has grown to more than 1.6 million people, according to Robinhood.
Robinhood said in regulatory filings that 17% of its revenue in the first quarter of 2021 came from cryptocurrency trading. According to CNBC, more than half of Robinhood's transaction-based revenue came from cryptocurrency trading last quarter.
Robinhood noted that increasing demand in cryptocurrency is coinciding with increased regulatory scrutiny, prompting the company to sign the deal with Chainalysis.