The nature of blockchain technology powering cryptoassets like bitcoin and central bank digital currencies (CBDC) is fundamentally different from the traditional information systems that underpin existing financial market infrastructure. Increased pressure from investor demand alongside a wave of technology innovation including global stablecoin projects and CBDC are driving organizations to accelerate strategic roadmaps to develop core technology capabilities for their business.
As blockchain adoption continues and business processes are transformed using decentralized applications on blockchain networks, they are faced with the immediate challenge to integrate different data structures into a consistent model that supports critical businesses and compliance functions. The complexity of these challenges extends as organizations adopt different types of crypto-native and tokenized assets enabled by different blockchain protocols.
The operation of a successful cryptoasset business at institutional scale hinges on the ability to efficiently and effectively integrate blockchain data alongside traditional data infrastructure to support core business functions across the front, middle and back office of the enterprise. KPMG Chain Fusion is designed to accelerate trusted adoption of core cryptoasset capabilities through a consistent data architecture that supports seamless business engagement across blockchain protocols.
Traditionally, multiple and redundant touchpoints are needed to get the systems to talk to each other and generate risk compliant reports:
KPMG Chain Fusion enables seamless interaction across blockchain protocols and traditional systems and by ingesting and structuring blockchain data from different protocols alongside existing data structures from traditional technologies into a core data architecture. The ingestion model is designed to consume network and market data from leading providers for cryptoassets, transactional data from off-chain databases, and integrations with leading permissioned blockchain protocols. These blockchain data sources are ingested and structured to be consistent with data consumed from traditional data sources, allowing for an integrated data environment to build business applications.
KPMG Chain Fusion core data architecture enables advanced analytics across modules for key use cases including custody or ‘wallets’, proof of reserves (asset position reconciliation), and AML transaction monitoring.
Custody is a foundational capability for institutional engagement in cryptoassets. KPMG Chain Fusion integrates a leading MPC wallet to support accelerated implementation and development of risk, control and performance analytics through integration with KPMG Chain Fusion unified data core.
The proof of reserves capability solves a key challenge in the ecosystem as crypto and digital asset organizations are not allowed to run fractional reserve systems. Proof of reserves allows for near real-time reconciliation of asset balances on a blockchain with an organization’s internal books and records run on traditional database infrastructure. This module has been developed in response to critical risk events in the market driving focused discussions across policymakers about the importance of controls and transparency into reserve detection.
The importance of robust AML programs for crypto and digital asset businesses is consistent across global jurisdictions with acute focus from global and local regulatory authorities. KPMG Chain Fusion AML transaction monitoring module leverages the unified data core and connectivity with leading blockchain analytics providers to enable a configurable rules engine for business defined AML typologies which span across crypto and traditional assets.
KPMG Chain Fusion is a dynamic capability which accelerates an organization’s ability to expand products and services while addressing new target markets. The potential for future analytics extends across key enterprise functions including security, finance, risk management, compliance, and audit.
2020 has tested the resiliency of the crypto ecosystem, and yet institutionalization continues to accelerate globally with increasing definition across global regulations, macroeconomic impacts on investments trends, and the rise of CBDCs. KPMG Chain Fusion is designed to accelerate institutional adoption of core capabilities by leveraging trusted technology and leading global service delivery to support businesses engaging with an increasing taxonomy of crypto and digital assets.
Blockchains are designed to create an immutable and verifiable ledger. However, gathering historical balance history from a reliable and independent source can be a tall order. Organizations must have a complete and accurate view of the assets they are holding both within their accounting systems and on the blockchain.
Crypto custody is the foundation of any business using cryptoassets. Safekeeping the private keys controlling assets without impacting the ability to do business is essential. Organizations must maintain a strong control environment for cryptoasset custody.
Financial crimes and terrorist financing are one of the key risks and regulatory focus areas for cryptoassets. Organizations must perform transaction monitoring that incorporates all transaction types including fiat and cryptoassets and across both asset types