How KYT works
A blockchain is public, so the history of any address can be traced. Analytics providers group addresses into clusters, attribute clusters to known entities such as exchanges, mixers, darknet markets and sanctioned parties, and expose the result through an API.
A platform sends each deposit and each withdrawal request to that API. The answer is a risk score with the reasons behind it: the share of funds that came, directly or through intermediate addresses, from each risky category.
Rules then decide what happens: credit the deposit, hold it for an analyst, refuse the withdrawal, or report the activity as suspicious.
Who needs KYT
Any business that receives or sends crypto-assets for customers: exchanges, on-ramps, OTC desks, stablecoin checkouts and card programmes funded in crypto. Banks that serve those businesses often ask how it is done before opening an account.
Exposure is rarely all or nothing. A policy sets thresholds by category and by distance from the source, and records why each alert was closed, because the record is what a regulator or an auditor asks to see.
KYT, KYC or the Travel Rule?
- KYC
- Identifies the customer. KYT looks at what the customer's funds have touched, which identity checks cannot show.
- Wallet screening
- Checks an address before any transfer, for example when a customer adds a withdrawal address. KYT checks the transfers themselves, and keeps checking.
- Travel Rule
- Passes the names of sender and recipient between providers. KYT reads the blockchain and needs no counterparty.
Where KYT shows up in a platform
Modules that do the work
- Compliance reportingTransaction monitoring, the Travel Rule and regulatory reports, ready for your regulator.
- KYC / AMLIdentity checks, screening and ongoing monitoring, with the verification provider you choose.
- Fraud & riskReal-time fraud scoring, limits and case management, with the risk engines you already trust.
- Custody & walletsWallets on every major chain, with MPC custody from leading providers or your own keys.
Platforms that need it
Guides that go deeper
- MiCA checklist: launching a crypto exchange in the EUWhat the EU's Markets in Crypto-Assets Regulation asks of an exchange: authorisation, capital, governance, client assets, the trading platform rules, and the laws that sit beside it.
- FCA cryptoasset registration: what UK crypto firms needWhat FCA registration under the Money Laundering Regulations asks of a UK crypto business, how crypto promotions are controlled, and what changes on 25 October 2027.