Predicate and Consensys Partnership Breakdown: Automated Compliance for MetaMask USD Stablecoin

As the organization behind MetaMask – the most widely-used self-custodial wallet with millions of downloads – few can say they’ve played a bigger role in the adoption of blockchain technology than Consensys. That’s why Predicate is proud to power robust, real-time compliance for Consensys’ MetaMask USD (mUSD) stablecoin: the first ever self-custodial wallet-based stablecoin. 

Consensys relies on Predicate Asset Compliance to prevent high-risk addresses from sending or receiving MetaMask USD. As one of Predicate Asset Compliance’s earliest adopters, Consensys has been invaluable in shaping its direction, and the team pushed us to think hard about how automated, contract-level compliance enforcement can scale to tens of millions of token holders. As a result of this collaboration, we’re able to provide Consensys compliance policies tailored to MetaMask USD’s unique needs, enforced directly onchain no matter where the asset moves.

The stablecoin compliance status quo: High overhead, missed threats

Stablecoin adoption is surging, with financial institutions, fintechs, and more bringing them to new users around the world. But the status quo for stablecoin compliance enforcement remains weak. Organizations need to prevent malicious actors from using their stablecoins, and today most accomplish this through manual processes: Researching address risk or waiting for alerts from government agencies, and then working with engineers to add those addresses to the stablecoin’s freeze list. The result: Lost time, operational overhead, and delayed or even nonexistent enforcement. 

Consensys came to Predicate because we have a better solution for stablecoin compliance: One that freezes high-risk addresses automatically as soon as the risk is identified, with virtually no manual work required from the compliance team.

The Predicate solution: Compliance that enforces itself

Predicate Asset Compliance enables Consensys to codify its definition of risk for MetaMask USD into a programmable policy. They decide exactly which onchain characteristics and external signals deem an address ineligible to hold the asset, drawing from whichever data sources they choose to measure address risk. Predicate continuously monitors those data sources and, as soon as it detects an address that violates the policy, restricts it as defined by the MetaMask USD policy. In MetaMask USD’s case, that policy covers addresses associated with OFAC designations, active DeFi exploits, and other forms of high-risk illicit activity.

The Predicate model gives Consensys the most robust compliance enforcement possible, while also saving time and overhead compared to the status quo. Analysts no longer have to pore over blockchain analytics data to spot high-risk addresses – Predicate catches them automatically. Adding new addresses to freeze lists no longer requires the compliance team to pull in engineering for a smart contract update – the list now lives offchain as a living reference for the existing token smart contract, and updates in real time. And if the compliance team learns of a high-risk address not covered by the existing policy, they can freeze it themselves from the Predicate dashboard in minutes.

Just the beginning

We’re excited to continue supporting Consensys as MetaMask USD scales and the team rolls out related products with their own compliance needs. Automated, real-time compliance is becoming the new standard for onchain finance, and as an early adopter, MetaMask USD is better positioned for higher growth, institutional adoption, and any future regulatory developments that may come. Stay tuned!

Talk to the Predicate team and learn how to automate compliance for your stablecoin.