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Ripple deal with Coinfirm could make XRP cryptocurrency compliant with AML world rules


JoeyBevo
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Forbes Article:

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"Ripple, the largest single owner of the XRP cryptocurrency (currently valued at $20 billion), has signed a deal with regulation technology startup Coinfirm, to shine new light on how the third-largest cryptocurrency is being used."

"Among the new anti-money-laundering (AML) information Coinfirm will provide about cryptocurrency users is whether the cryptocurrency has been processed by technology called a “mixer,” designed to launder cryptocurrency by privately exchanging funds from multiple counterparties; information on clustering, when small amounts of currency are sent via many different addresses to disguise the size of large transactions; and whether or not the funds come from a known theft or hack."

CoinFirm:

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"Recognized as a global leader in RegTech for blockchain, Coinfirm serves as a foundation for the safe adoption and use of blockchain. The Coinfirm AML/CTF Platform uses proprietary algorithms and big data analysis to provide structured, actionable data that solves compliance and transaction risk issues in blockchain and cryptocurrencies. The blockchain agnostic platform is currently used by anyone ranging from major financial institutions to exchanges. In addition, Coinfirm develops dedicated blockchain solutions such as the data provenance platform Trudatum that was recently integrated by the largest bank in CE."

 

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I got a feeling we are prepping for a huge announcement a lot of moves being made to sure up things to make sure all the ducks are in a row.

 

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Notably, the new information will not include the actual identities associated with public addresses where cryptocurrency is stored, according to Coinfirm CEO Pawel Kuskowski. But it will include information like whether or not an address is owned by an exchange that allows anonymous trading, and whether or not the entity that owns the address is registered in a country deemed high risk. A report then grades the address as low, medium or high risk and gives it a score of 0 to 99, with 99 being the highest risk for money laundering.

Will this affect individual XRP coins fungability? Will there be regulations requiring certain exchanges to not allow transactions for coins with high risk scores? I think that XRP being strait laced and working with regulators is/can be an advantage, but what happens if I'm party to a transaction with a "flagged" coin and now my XRP is essentially worthless? 

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57 minutes ago, EXARRPEE said:

Will this affect individual XRP coins fungability? Will there be regulations requiring certain exchanges to not allow transactions for coins with high risk scores? I think that XRP being strait laced and working with regulators is/can be an advantage, but what happens if I'm party to a transaction with a "flagged" coin and now my XRP is essentially worthless? 

High risk scores? From a settlement time frame, XRP would have one of the lowest risk scores.

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6 minutes ago, Chris_Reeves said:

High risk scores? From a settlement time frame, XRP would have one of the lowest risk scores.

What does settlement time have to do with high risk in this context?  In the article high risk = transaction originating from an undesirable source. Are you confusing high risk with price volatility?

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2 hours ago, EXARRPEE said:

Will this affect individual XRP coins fungability? Will there be regulations requiring certain exchanges to not allow transactions for coins with high risk scores? I think that XRP being strait laced and working with regulators is/can be an advantage, but what happens if I'm party to a transaction with a "flagged" coin and now my XRP is essentially worthless? 

It’s not the ‘coins’ at question.  There is no coin.  There are only Ledger amounts (drops).

What is at issue is the acceptability of a funds transfer from a particular address.  If the address is low risk then proceed.  If high then don’t.  

So I don’t see that having any affect on ‘fungability’ which in this context is not at question or relevant.  

So essentially the only risk is if your wallet has been misidentified as suspicious or if you are in fact a nefarious actor.  

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Ripple has signed a deal with regulation technology startup Coinfirm, to shine new light on how the third-largest cryptocurrency is being used. Among the new anti-money-laundering (AML) information Coinfirm will provide about cryptocurrency users is whether the cryptocurrency has been processed by technology called a “mixer,” designed to launder cryptocurrency by privately exchanging funds from multiple counterparties; information on clustering, when small amounts of currency are sent via many different addresses to disguise the size of large transactions; and whether or not the funds come from a known theft or hack.

Source: https://www.forbes.com/sites/michaeldelcastillo/2019/06/26/ripple-deal-could-make-xrp-cryptocurrency-compliant-with-fatf-anti-money-laundering-regulations/#d759f423aab1

Example analysis of Coinfirm.

pic2.png

 

pic1.png

Edited by Guyfromfuture
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11 hours ago, Tinyaccount said:

It’s not the ‘coins’ at question.  There is no coin.  There are only Ledger amounts (drops).

My apologies still trying to get all the jargon strait. By "coin" I meant individual unit of account. 

Investopedia: Fungability

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"Fungibility is the ability of a good or asset to be interchanged with other individual goods or assets of the same type. Fungible assets simplify the exchange and trade processes, as fungibility implies equal value between the assets... Fungibility implies that two things are identical in specification, where individual units can be mutually substituted"

Based on the definition above, my understanding of fungability is:
A bushel of apples is fungible with another bushel of apples if it is of the same "kind and, same quality" of apples. A bushel of apples that have gone bad will not be of the same "quality", the bad apples are no longer fungible with other apples of the same "kind". 

11 hours ago, Tinyaccount said:

What is at issue is the acceptability of a funds transfer from a particular address.  If the address is low risk then proceed.  If high then don’t.  

So I don’t see that having any affect on ‘fungability’ which in this context is not at question or relevant.  

Lets say I'm an apple merchant and I accept XRP. If my address gets flagged because I have received drops from an address where the owner has been identified to be in/from a country deemed high risk, (the Iranians really love my apples) and I am no longer allowed to transfer those drops into certain exchanges. Do the drops in (at?) my address have the same utility or "quality" as non-blacklisted drops? The drops in (at?) my address have been blacklisted, "gone bad" in the apple example, those drops are no longer of the same "quality". 

If a drops transnational history can get it blacklisted for further transactions is that drop still fungible compared to untainted drops? I would argue that a blacklisted drop does not have the same utility (universal transferability), therefore they are no longer fungible. 

Please point me in the right direction if I'm off base.

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53 minutes ago, EXARRPEE said:

My apologies still trying to get all the jargon strait. By "coin" I meant individual unit of account. 

Investopedia: Fungability

Based on the definition above, my understanding of fungability is:
A bushel of apples is fungible with another bushel of apples if it is of the same "kind and, same quality" of apples. A bushel of apples that have gone bad will not be of the same "quality", the bad apples are no longer fungible with other apples of the same "kind". 

Lets say I'm an apple merchant and I accept XRP. If my address gets flagged because I have received drops from an address where the owner has been identified to be in/from a country deemed high risk, (the Iranians really love my apples) and I am no longer allowed to transfer those drops into certain exchanges. Do the drops in (at?) my address have the same utility or "quality" as non-blacklisted drops? The drops in (at?) my address have been blacklisted, "gone bad" in the apple example, those drops are no longer of the same "quality". 

If a drops transnational history can get it blacklisted for further transactions is that drop still fungible compared to untainted drops? I would argue that a blacklisted drop does not have the same utility (universal transferability), therefore they are no longer fungible. 

Please point me in the right direction if I'm off base.

My understanding is that there is nothing that differentiates one drop from another. Therefore it's not possible to blacklist or even trace any single drop through transactions.

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49 minutes ago, ZeeperCreeper said:

My understanding is that there is nothing that differentiates one drop from another. Therefore it's not possible to blacklist or even trace any single drop through transactions.

Did some more research, I think I understand now but not certain. @Tinyaccount let me know if i figured it out. Drops do not have ID numbers/tags. The ledger keeps track of the balance of drops, not individual drops. Therefor fungibility of drops can not effected as they can't be individually identified. It is the wallet/address that can be blocked/blacklisted from transacting by exchanges/wallets/merchants? 

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It appears from the graphic posted by @Guyfromfuture that 77% of the risk score is derived from KYC ("no or limited KYC"). I think as long as your KYC is clean, you will be okay. I suppose if you unknowingly received funds that were stolen, you might not be able to retain those - but that is what the whole security thing is about, yes? Or maybe that's just one example, IDK...

10 hours ago, Guyfromfuture said:

image.png.24e4caee81afc3c8593e1a70daa9a766.png

Edited by GiddyUp
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