KYT (Know Your Transaction)
KYT, or Know Your Transaction, is the practice of monitoring and analyzing blockchain transactions to assess risk and support AML compliance.
KYT applies real-time and retrospective analytics to on-chain data to detect suspicious patterns, trace flows, and risk-score activity. It complements KYC by focusing on transactions rather than identities.
"Exchanges use KYT providers to flag deposits linked to ransomware, mixing services, or sanctioned entities."
"Payment processors monitor merchant wallets to detect abnormal spikes or structuring behaviors."
Techniques include clustering heuristics, watchlists, travel rule metadata, and machine learning. Privacy-preserving approaches aim to minimize data collection while meeting regulatory goals.
"Address clustering can infer wallet ownership, while heuristics must account for false positives in CoinJoin-like transactions."
"The travel rule requires sharing originator and beneficiary information for qualifying transfers across platforms."
Related Terms
Anti-Money Laundering
→Laws and processes that aim to prevent illicit funds from being disguised as legitimate.
Block Explorer
→A website or tool for viewing blockchain data like transactions, addresses, and blocks.
Indexer
→An indexer parses blockchain data and serves structured queries for apps, enabling fast lookups beyond what a raw full node provides.
Cryptocurrency Exchange
→A platform that facilitates the buying, selling, and trading of cryptocurrencies. Exchanges can support crypto-to-crypto or crypto-to-fiat transactions and serve as crucial infrastructure in the digital asset ecosystem.
All terms and definitions may update as the Cryptionary improves.
