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“What criteria should our business consider when choosing a blockchain analytics solution?”
It’s a discussion currently taking place in various institutions, with many deciding that crypto is “too big to ignore”.
After deciding that they have a need to manage cryptocurrency risks using blockchain analytics, the next step for any regulated firm is often to issue a request for proposal (RFP). After all, if you need to manage cryptocurrency risks, you’ll want to work with experts, right?
So what questions should your firm ask when looking for a potential blockchain analytics provider?
At Elliptic, we have experience working with large enterprises using blockchain analytics. We also understand that deciding which factors to consider during that process can often be a huge challenge. So, we’ve put together five key questions that we think your firm should definitely consider when issuing an RFP for blockchain analytics.
1. What is the scope of data coverage of the provider?
This is a critical question, because the data you can use will ultimately make or break your program. Some providers have been around longer than others and there are often differences between the quality of information they can provide.
You’ll want to work with a vendor that has a visible width and the depth of data coverage across different blockchains and assets, as you will need to be able to track transactions and wallets and gain clarity on fund flows (source and destination). By the way, the blockchain provides much more information about these areas than you will find in the fiat world. You can learn more about blockchain analytics here.
You need to be able to identify illegal and potentially suspicious activity, as well as feel comfortable in areas such as sanctions exposure. And you’ll have to do it at scale and programmatically, or you’ll have to hire more people than originally planned.
2. What kind of support do you provide?
While some user interfaces for blockchain analytics tools are intuitive, others may be less so. Imagine being given the chance to race in NASCAR. Even if you already know how to drive, you will probably still need help on how to do it in this type of vehicle.
Basically, we’re talking about customer success. This could mean technical software/API help, a reference library, or good old customer support. Who’s here to help? What does “help” really mean? How long does it take to arrive? How quickly are new sanctions tags added? Don’t be afraid to ask such questions, because these are all things you need to know.
To extend the analogy above, you don’t want to be thrown your car keys and told “good luck, you’ll be fine” – especially when you’re paying for a service. So be clear about how support works from the start and how it compares between vendors.
You’ll also want access to hard-hitting subject matter experts—those who have the background, experience, and insight to add real value to your organization in terms of strategy and tactics.
Anyone preparing for a regulatory visit or internal audit can benefit from an expert review board, or perhaps even a friendly sparring partner. Being able to survey some of the leaders in the space can be really useful – especially given the pace of change. Therefore, understanding the level of support in this area can be a key differentiator when choosing a vendor.
3. Is the system scalable and configurable according to our risk appetite and regulatory requirements?
Risk rules (or scores) are a key principle of blockchain analytics. They provide a snapshot of all the magic going on behind the scenes, allowing you to make risk-based decisions in areas such as sanctions risk or exposure to various other illicit activities.
Out-of-the-box risk rules are an excellent, effective starting point. But as you collect more usage data, you may want to tailor your risk rules to your own business strategy, risk appetite, regulatory environment, and the appropriate systems and controls you implement.
Can the vendor support alignment between your written policies and the technical bid offer? Can they provide advice and insight on how to make it most effective for your organization? Will they work with you to discover and implement what “good” looks like?
As you become more sophisticated in your approach, and your use of blockchain analytics evolves, these are the improvements you’ll likely want to make. This means you’ll need a supplier that can support you as your business grows.
4. Who are you partnered with?
Larger and/or long-established firms always have an entire compliance ecosystem, including existing partnerships, workflows, and a stack of legacy products. This means that complementing your current integrations and partnerships can streamline the implementation process – making the most of existing relationships, or even making them more onerous.
The other side of that, of course, is that partnerships and integrations offered by a blockchain analytics provider can also help you tap into new approaches. You can also develop relationships not previously considered in terms of streamlining your broader compliance processes. This is something you should ask when issuing an RFP for blockchain analytics.
5. What training and certification options do you offer?
There is some overlap here with question two, but training is also a separate area to consider. Importantly, undertaking and demonstrating ongoing activity-specific training – particularly in relation to financial crime – is also a key pillar of regulatory frameworks around the world. Check out our post on the importance of cryptocurrency compliance training here.
So let’s break this down into two parts:
Broader understanding/context
Your dashboard will evolve for crypto; the topic and technology may be new to many people, especially from the traditional financial reconciliation (TradFi) space. So how do you quickly upskill your teams for compliance with global frameworks, regulatory requirements and systems and controls best practices? How can I get to grips with how the technology actually works?
It’s not just the second line teams. The front line will need to be able to spot red flags for money laundering, for example. Even where internal policies and procedures already exist, this broader understanding adds real value. It also shows regulators – and internal audit teams – that the training is timely, relevant and taken seriously.
Product certification
It’s all very well to have tools, but do you know how to use them? and get the best out of them?
As mentioned in the second question, a good vendor should be available to ensure you have support. A great vendor can provide hands-on training and certification options that challenge you to use the tools as a means to an end and prove your mettle. Ultimately, it is the outcome of risk management that ultimately matters and you will need to be able to explain the “why” behind the decisions. Certification is also something regulators and internal audit teams will be happy to see.
Finding answers
Of course, this is just a quick look at some of the headline RFP questions. Choosing a blockchain analytics vendor is a big decision for any organization, which usually involves a whole team of people with different goals and skill sets.
While the questions you ask are important, the answers will be even more so, and they can be difficult to pin down. However, after asking the questions above, here are just some of our answers – the reasons businesses choose to work with Elliptica:
- We are a trusted partner, no seller. We are available 24/7 to support you, wherever you are on your crypto journey. In fact, if you’re not sure yourself, we’d love to talk to you!
- We provide right solution, not only a solution.
- We have the largest and most accurate blockchain dataset ever created, with more than 100 billion pieces of data. We’ve been collecting data since 2013 and have linked hundreds of millions of cryptoasset addresses to known entities.
- Our tools are very intuitive and mean you can review (and re-review) transactions and wallets at scale, so you can focus your limited human resources where they can have the biggest impact.
- Our risk rules are configurable, giving you the flexibility to tailor them to your unique risk appetite.
- Our multi-asset platform uses sophisticated data science and machine learning to calculate risk scores at the transaction, user or wallet level.
- We provide a single view of risk across all cryptoassets that is easy to access from a browser interface or through a powerful API, allowing transactions and wallets to be verified at scale.
- Ours Holistic screening the methodology drastically reduces your effort by automatically tracking across assets and chains – no more searching for individual tokens.
- Ours Customer Success Team, Advisory Team and partners are there to support you along the way, providing support and insight – ensuring you achieve your goals.
- Ours training and certification options means you can improve your teams and demonstrate your commitment to effective, meaningful learning to internal and external stakeholders.
If these are the answers your business is hoping for, you can contact us to find out how we can support you on your crypto journey.
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