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Regulatory Compliance with Continuous Wallet Monitoring

Blockpour Enterprise Use Cases: Regulatory Compliance with Continuous Wallet Monitoring


Monitor Web3 business wallets to remain compliant with local financial regulations.


The break-neck speed of development in the Web3 space, which includes blockchain and cryptocurrency, has been an astounding phenomenon. Rapid development has led to the transfer of astronomical sums of capital flowing to the individuals and teams responsible for the most popular solutions in use today. However, it has opened up the digital financial space to a new breed of regulatory tight ropes that requires businesses to utilize continuous wallet monitoring solutions.

Financial regulators noticed the formation of a new nouveau riche class from the industry and have worked to implement rules that aim to protect crypto users from the perils of interacting with known bad actors. Chief among those rules is the ‘Travel Rule’ from the Financial Action Task Force (FATF). Those rules include requirements for entities to perform Know-Your-Customer (KYC) procedures with clients and partners, which holds them accountable if anyone in the network that they transact with has interacted with sanctioned wallets. In this way, it is not enough to know your customer, businesses must also know their customers’ transactions.

KYC in the crypto realm is vital for maintaining regulatory compliance and mitigating risks associated with money laundering, fraud, and other illicit activities. For businesses, it applies to the use of any crypto asset such as stablecoins, $ETH, and $BTC. By gathering essential identification information from users, such as their name, address, and identification documents, crypto businesses can ensure the legitimacy of their customers and create a transparent and accountable ecosystem.

The Challenges of Financial Regulatory Compliance in Web3

Financial regulators are gaining an ever-growing emphasis on regulation and compliance no matter the costs to businesses. As the Web3 industry matures, regulators demand more comprehensive reporting and robust audit trails of past transactions.

To stay compliant with international and local financial regulations, KYC efforts in the Web3 space are not cutting it. Entities must dedicate resources to continuous wallet monitoring of the digital wallets their clients and partners use to ensure each transaction is performed with a non-sanctioned wallet, and that the transaction itself is on the level. This is a process known as Know-Your-Transaction (KYT), and it aims to foster a safer and more secure environment within the rapidly evolving digital asset landscape.

Transaction monitoring in the cryptocurrency realm refers to the systematic and ongoing tracking and analysis of financial transactions occurring on blockchain networks. It involves the scrutiny of transaction data to detect any suspicious or potentially illicit activities, such as money laundering, fraud, terrorist financing, or other forms of financial crime. Transaction data is publicly available on open blockchains which certainly increases the accessibility to the data, but it can be difficult for middle office managers to sift through scores of transactions to find the needle in a haystack they were looking for. This is a topic discussed in a previous use case blog on blockchain transaction reconciliation.

Furthermore, using block explorers to perform manual KYT on client wallets is a wildly inefficient method because of the extreme time cost and the strain it puts on a person who has to reconcile thousands of transactions between potentially tens of thousands of wallets. This is also a flawed method since human error factors into the process.

With regards to continuous wallet monitoring, companies in the Web3 space have turned to specialized blockchain forensic software for transaction risk monitoring. These tools, although highly effective for investigating coin lineage, often come with a catch. Businesses find themselves in a situation where they are paying for a vast array of features, many of which are beyond their immediate requirements. It's like buying a whole book when you only need a chapter.

Strict VASP Compliance Rules

The onus is mostly placed on Virtual Asset Service Providers (VASP) as defined by FATF, which includes cryptocurrency exchanges, stablecoin issuers, and some smart contract-based entities such as NFT marketplaces. Going forward, VASP Compliance Officers must mandate KYC checks and regularly monitor suspicious activity to thwart nefarious transactions that could be linked to money laundering and terrorist financing.

The current system of using hashes for identifying and tracking transactions on the Ethereum block explorer, Etherscan, can be difficult to navigate and comprehend, especially when dealing with a large number of transactions. The lack of clear labels for wallets adds to the challenge of verifying token movements for OTC trades. This not only creates eye strain for managers responsible for tracking these transactions but also increases the risk of errors. It is crucial to provide a more user-friendly experience and facilitate efficient tracking and verification of transactions.

Additionally, VASPs must report suspicious activity to relevant regulators and agencies who are responsible for analyzing the flow of funds and tracing unlawful activities to real-world identifiers using various tools, including blockchain analysis. Continuous wallet monitoring this data when required is a burdensome operational bottleneck as it requires a whole new sector of a business to perform which needs management, and which could siphon resources away from the core operations of the business.

Using Blockpour Recon for Continuous Wallet Monitoring

Blockpour Recon simplifies the KYT and continuous wallet monitoring processes for businesses and enterprises by linking real-world identities directly with on-chain wallet addresses. Being able to internally label Web3 wallets by the entity they belong to vastly enhances the KYT experience.

Also, compliance officers can easily aggregate blockchain activities across Blockpour’s supported networks, thereby gaining the ability to conduct comprehensive historical audits and effectively monitor on-chain transactions of an entire identity profile. This unifies formerly fragmented activities linked only to individual wallets.

With one-time setup of the identity profile, Blockpour users can effortlessly select relevant identity profiles and directly access historical transactions across multiple chains linked with that identity through the Transaction Query interface. This functionality proves particularly valuable for onboarding officers, equipping them with the ability to glean insights into a new customer's historical behavior by highlighting transaction patterns and counterparty interaction in one click.

The on-chain identity profile on Blockpour Recon plays an integral role in continuous wallet monitoring. Equipped with comprehensive on-chain transaction history, compliance officers can readily leverage advanced filters to pinpoint specific transactions aligned with set criteria or establish real-time alerts and scheduled reports for automated reporting.

Blockpour Recon offers bespoke service packages to ensure clients are only using the services that they need rather than being troubled with superfluous options.


Blockpour’s strategic partnership with Merkle Science enhances the platform’s capabilities to provide advanced insights into transaction risk assessment. This enables real-time monitoring to promptly identify suspicious activities or counterparties when examining a comprehensive record of on-chain activities. With Blockpour Recon's integrated solution, businesses can streamline reconciliation and compliance processes into a singular, cost-effective platform.

About Blockpour

Blockpour is a technology firm specializing in Web3 data and analytics, offering individuals and businesses indispensable data and tools to navigate the dynamic on-chain universe while bridging seamlessly to the off-chain world.

Through our real-time and historical multi-chain data feeds, businesses and traders can fully unlock the power of blockchain data to inform their strategies, optimize operational efficiency, and drive top-line growth.

To learn more about Blockpour check out our website and follow us on Twitter or LinkedIn. For sales or inquiries about the API, contact [email protected].


The above article is for informational purposes only and is not financial advice. Blockpour is a data aggregation and analytics platform only and does not provide financial advice or services of any kind.

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