On December 10, the blockchain intelligence firm Chainalysis revealed that the company has added support for Bitcoin’s second-layer protocol the Lightning Network (LN). According to Chainalysis, firms like exchanges and virtual asset service providers (VASPs) can leverage the company’s Know-Your-Transaction (KYT) real-time transaction monitoring software in order to access compliant bitcoin deposits and withdrawals from a LN node.

Compliant Lightning Transactions

The blockchain surveillance and intelligence company, Chainalysis, announced on Friday that the company has added Lightning Network (LN) support to its list of blockchain and crypto-asset networks, the company currently monitors. For years, Chainalysis has monitored the Bitcoin (BTC) blockchain, and these days the firm is not only monitoring BTC, but also a myriad of crypto networks and decentralized finance (defi) protocols.

Essentially, the LN is an offchain routed “layer 2” (L2) payment channel network that helps facilitate bitcoin (BTC) transfers faster and cheaper than onchain transactions. The Chainalysis LN support will provide VASPs with “Chainalysis KYT (Know-Your-Transaction) for real-time transaction monitoring will now be able to compliantly allow deposits and withdrawals of Bitcoin from a Lightning node.”

As of December 1, 2021, Chainalysis estimates there is “just under 3,600 BTC worth over $205 million is locked in public Lightning Network channels.” This has increased a great deal since the total value locked in the LN was around 468 BTC on January 1, 2021. Chainalysis also mentions that the LN L2 system is leveraged by countries such as El Salvador and large corporations like Twitter. Pratima, chief product officer at Chainalysis, explains that compliance with LN transfers will allow the LN to mature.

“Chainalysis is designed to increase trust in cryptocurrency and promote financial freedom with lower risk,” Arora stated in a statement. The Lightning Network addresses many of the problems that prevent Bitcoin protocol being used to make micropayments or other types of transactions that promote financial inclusion. We hope to increase the popularity of the network and make it more .”

accessible by allowing customers to support Lightning transactions.

Lightning Network Support to Chainalysis KYT Customer Launches in February

Chainalysis is expanding its resources and faces many blockchain intelligence and monitoring rivals. The company raised $100 million at the end of June in its Series E funding round and the previous C and D rounds also saw $100 million capital injections. According to the company’s announcement, the company’s post-Valuation was $4.2 billion after the Series E.

Chainalysis claims it can now support Lightning transactions for the first-time, and that VASPs will offer support in accordance with international regulatory best practices. The Chainalysis KYT product supports “prescreening for Lightning withdrawals” and “behavioral alerts.” In February, Chainalysis KYT customers will have access to the LN support.

What do you think about Chainalysis adding Lightning Network support? Please comment below to let us know your thoughts on this topic.

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