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The below discussed four applications are only a glimpse of where blockchain technology stands in the Regtech space, but the scope of blockchain technology does not end here.
Fremont, CA: Blockchain is one of the key technologies fuelling the regtech revolution. Thanks to the numerous potential advantages of blockchain– increased transparency due to a distributed ledger, quicker and more cost-effective through automation, improved security through cryptography, and better record-keeping – RegTech companies apply it to a wide range of applications:
Anti-Money Laundering, Customer Onboarding, and Fraud Protection
Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations for client onboarding are the ‘must-consider’ choices when we discuss blockchain applications in RegTech. Businesses are seeking to tackle this area, and the reason is simple. All financial firms need to gather data on potential clients before starting to do business with them. Besides, this data needs to be updated frequently for current counterparties. This is quite time-consuming and very costly, both in terms of resources and money invested. The best solution would be to consider a universal ledger that all banks could use to identify their clients and track transactions.
Monitoring is the second critical use case due to the improved transparency blockchain offers. Again, this is a particularly obvious application in the blockchain world itself, i.e., tracking transactions in cryptocurrencies, especially considering the increased use of virtual currency for money laundering. At the same time, blockchain offers improved traceability and quicker analysis anywhere assets are digitalized.
The critical problem with Big Data is that, in many situations, the vast storage of information generates huge volumes of unstructured data, which is of no use. Although this poses an attractive field for businesses with so many different approaches, RegTech firms applying blockchain technology seek to address this issue as its root. The goal is to produce data that is transparent and a distributed ledger to make it available for internal use, documented for audit purposes, and protected from misappropriation. For this reason, record-keeping is another prominent aspect.
Regulatory Fund Management
The tokenization of assets in the fund sector is another excellent example of the use of blockchain technology. The use of smart contracts offers an invaluable benefit due to the effects of automation. Also, it protects critical regulatory reporting and compliance with the fund's regulatory obligations in real-time.
Check out: Top RegTech Solution Companies