Blockchain data platform Chainalysis will start supporting the Lightning Network in February, the company announced Friday.
The Lightning compatibility will be available for customers of Chainalysis' cryptocurrency compliance software, KYT (Know Your Transaction). KYT helps virtual asset service providers (VASPs) like exchanges detect risk patterns and illegal activity.
Now, these VASPs will be able to "compliantly allow deposits and withdrawals of Bitcoin from a Lightning node," Chainalysis said in a press release. KYT will be able to provide alerts for Lightning transactions and pre-screening for withdrawals, it added.
"By enabling our customers to compliantly support Lightning transactions, we hope to grow the network's popularity and help it scale," Chainalysis chief product officer Pratima Arora said in a statement.
The Lightning Network is a decentralized, Layer-2 protocol for sending instant Bitcoin payments. Its capacity has been growing rapidly this year.
Today the always-on demands of online markets have to be matched with the ability to access opportunities instantly and with no limits. Historically correspondent banks would move large sums of money for those needing to transfer funds while creating bottlenecks of unnecessary friction.
Ethereum had a breakout year in 2021. It’s native asset, ETH’s, market capitalization surpassed $500 billion for the first time. Its network facilitated upwards of $7 trillion value transfer. Non-fungible tokens (NFTs) emerged as another “killer application” that have put its technology on the global stage and caught the attention of the masses.