Chainlink launches compliance tool to unlock $100T in institutional capital

Chainlink, a decentralized blockchain oracle network for crosschain communication, launched a compliance tool aimed at unlocking over $100 trillion worth of institutional investor capital for the cryptocurrency space.

The decentralized oracle network announced the release of its Automated Compliance Engine (ACE) on Monday. The system provides a modular and standardized framework for managing regulatory compliance across both traditional and decentralized finance (DeFi) systems.

Chainlink said the tool will allow the creation of compliance-focused digital assets and services across public and private blockchain networks, including reusable digital identities, automated policy enforcement, crosschain compliant digital asset settlement and regulated asset usage in DeFi.

ACE is currently in early access for select institutions and aims to unlock $100 trillion worth of new capital to enter the blockchain economy, the announcement said.

Chainlink launches ACE. Source: ChainlinkThe tool was built on the Chainlink Runtime Environment and is launching in collaboration with market participants, including financial solutions provider Apex Group, the Global Legal Entity Identifier Foundation (GLEIF) and the ERC-3643 Association.

Existing compliance processes in traditional finance are often fragmented and expensive, resulting in billions of dollars in costs for institutions.

Financial crime compliance for institutions in the US and Canada cost upward of $60 billion in 2023, according to a research report by LexisNexis and Forrester Consulting.

Chainlink said its privacy-preserving compliance framework integrates existing digital identity solutions and supports both onchain and offchain policy enforcements, enabling institutional digital asset deployment in a compliant manner.

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ACE to unlock $100 trillion worth of institutional capital

ACE aims to make digital asset compliance faster, cheaper and more accurate, according to Sergey Nazarov, the co-founder of Chainlink.

“If you make a digital asset and use the Chainlink standard for compliance in that digital asset, it will be better, cheaper, and faster than its traditional alternative,” said Nazarov, adding:

“Chainlink ACE is the compliance and identity standard the tokenized asset economy has been waiting for, with today’s launch providing a final critical building block for over $100 trillion in institutional capital to move onchain.”

Previous solutions often relied on manual processes for risk monitoring and identity verification, which often resulted in duplicated efforts across counterparties due to a lack of transparency.

In contrast, Chainlink’s architecture allows compliance logic to be reusable, upgradeable and enforceable across any combination of token standards, which it claims will result in smaller onboarding costs and operational complexities.

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Chainlink’s compliance engine is a “powerful example of how verifiable organizational identity can enhance compliance across blockchain ecosystems,” according to Alexandre Kech, CEO of GLEIF.

“As regulatory expectations evolve in both digital and traditional finance, we encourage all financial institutions to explore with their solution providers how adopting the vLEI can strengthen trust, interoperability and auditability in their compliance frameworks,” said Kech.

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