Chainlink Unveils ACE to Cut Compliance Costs by 90%

Chainlink Co-founder Sergey Nazarov recently highlighted the transformative potential of blockchain technology in compliance economics during the RWA Summit 2025 in Cannes. Nazarov asserted that blockchain-based compliance tools could be more than 10 times faster and cheaper than traditional finance offerings, addressing the inefficiencies and high costs associated with current compliance processes.

Traditional financial compliance products are notoriously expensive, costing billions due to complex manual processes and fragmented systems. Nazarov pointed out that compliance, particularly identity verification for Anti-Money Laundering (AML) and Know Your Customer (KYC) procedures, is a significant pain point in the traditional finance industry. By solving these inefficiencies, blockchain technology could unlock substantial institutional capital, allowing more institutions to participate in the blockchain economy.

To support this vision, Chainlink unveiled its Automated Compliance Engine (ACE) on June 30. ACE is a modular framework designed to manage regulatory compliance across both traditional and decentralized finance protocols. The company aims for ACE to unlock $100 trillion worth of institutional capital entering the blockchain economy, demonstrating the potential scale of blockchain's impact on compliance economics.

Financial institutions are under mounting pressure to reduce compliance expenses, which cost them upward of $60 billion annually in the United States and Canada alone. This burden is a significant driver for the adoption of blockchain technology, which promises to streamline compliance processes and reduce costs. Institutional crypto adoption has accelerated throughout 2024 due to improved regulatory frameworks, providing institutional traders with more confidence when accessing digital asset markets.

Tokenization of traditional financial products is another major trend driving institutional interest in blockchain technology. By investing in traditional assets through tokenization, institutions can benefit from the efficiencies of blockchain, making compliance and identity costs five to 10 times cheaper. This cost advantage is a significant driver for institutional adoption, as it allows for more efficient management of regulatory compliance and risk.

However, institutional adoption of blockchain technology faces fundamental hurdles around risk management frameworks. Banks and enterprises require clear mechanisms to manage risk exposure and accountability within decentralized systems. Traditional finance demands robust risk management, while public blockchains often lack the necessary safeguards for institutional operations. Despite these challenges, the potential benefits of blockchain in compliance economics are significant, and the financial industry is increasingly recognizing the need to embrace this technology.

Institutional allocations to blockchain-based assets are expected to double from three percent today to seven percent by 2027. This growth reflects increasing institutional confidence in blockchain-based asset tokenization for traditional investments like equities and commodities. The onchain real-world assets have reached $25.4 billion across 318,000 asset holders, excluding stablecoins, further demonstrating the growing acceptance of blockchain technology in the financial sector.