Blockchain Analytics

Blockchain analytics refers to specialized tools and techniques that analyze on-chain transaction data to trace cryptocurrency flows, identify wallet ownership, assess risk levels, detect illicit activity, and support compliance obligations for anti-money laundering and sanctions screening.

Leading blockchain analytics platforms including Chainalysis, Elliptic, and TRM Labs aggregate transaction data from public blockchains, combine it with proprietary databases of known entities (exchanges, darknet markets, sanctioned addresses, mixing services), apply graph analysis and machine learning algorithms, and provide risk scoring for addresses and transactions. Analytics can identify clusters of related addresses controlled by single entities, trace fund flows through multiple hops, and attribute wallets to real-world individuals or organizations.

VASPs and crypto exchanges rely on blockchain analytics for regulatory compliance including real-time transaction monitoring for OFAC sanctions screening, SAR filing support when suspicious patterns emerge, Travel Rule compliance linking wallet addresses to customer identities, and enhanced due diligence for high-risk counterparties. Law enforcement uses blockchain analytics for criminal investigations, asset seizures, and prosecution evidence. Despite crypto's pseudonymity, blockchain transparency enables transaction tracing impossible in traditional cash-based systems. However, analytics effectiveness diminishes against privacy coins, sophisticated mixing techniques, cross-chain bridges, and privacy-enhancing technologies including CoinJoin and zk-SNARKs. Regulatory frameworks increasingly require VASPs to implement blockchain analytics as core AML infrastructure.