Clean money in clean hands: the programmable future of compliant on-chain finance

Ceridwen Choo of Cleanverse shares why next-gen on-chain finance needs programmable controls and real-time compliance to securely scale AI agents and assets.

When you talk about ‘reconstructing TradFi governance on public blockchains’, what does that actually look like in practice? What elements of traditional finance must be preserved, and what should be rethought?

When we talk about reconstructing TradFi governance on public blockchains, we do not mean copying old banking systems onto new technology. We mean taking the core principles that make traditional finance trusted - identity, accountability, clean funds, auditability, risk controls, and regulatory oversight - and making them work natively in an on-chain environment.

This is aligned with the regulatory philosophy of ‘same activity, same risk, same regulatory outcome’ adopted by the IOSCO in defining the global standards for DeFi. If a financial activity creates the same risks as traditional finance, it should meet equivalent governance standards, even if it is conducted on public blockchains.

In traditional finance, value does not move in a vacuum. There is a known customer, a regulated institution, a compliance framework, and a record of responsibility. Those elements must be preserved. What needs to be rethought is how they are delivered. Today, much of compliance still happens after a transaction through monitoring, reporting, reconciliation, and investigation. On-chain finance allows us to move from post-facto compliance to programmed compliance, where eligibility checks, identity verification, asset provenance, and transaction rules are enforced before value moves.

TradFi offers governance, accountability, and trust. Public blockchains offer transparency, programmability, and near-real-time settlement. The next generation of finance will come from combining both open rails with institutional-grade rules embedded into every value transfer.

What are the key building blocks of a ‘trust layer’ for on-chain finance, technically and institutionally?

A trust layer for on-chain finance has to operate at two levels: the technical layer and the institutional layer.

Technically, the first building block is verified identity. A wallet must represent more than a string of characters; it should be associated with a verified and accountable participant. The second is verified assets. The asset being transferred must be regulated, traceable, and eligible for the transaction. The third is a policy engine that can enforce rules on-chain, including sanctions controls, blacklists, Travel Rule requirements, jurisdiction-specific rules, and asset eligibility checks before settlement. The fourth is interoperability. The trust layer must be chain-agnostic and wallet-neutral because institutions will not operate in a single-chain world.

Institutionally, the trust layer requires shared standards. No single jurisdiction, network, or infrastructure provider can define the rules of global finance alone. Banks, stablecoin issuers, licensed Web3 service providers, payment firms, and regulators all need a common rulebook. That is why governance matters as much as technology. A trust layer is not just smart contracts; it is a framework of responsibility, auditability, supervision, and enforceable participation standards.

Which types of institutions - banks, fintechs, regulators - should be paying closest attention right now, and why?

It is not a question of whether banks, fintechs, or regulators should pay the closest attention. All three need to be paying attention now because trusted on-chain finance depends on the ecosystem moving together.

Banks bring institutional trust, regulated balance sheets, custody standards, risk management, liquidity, and access to real-world financial flows. They are the institutions that can move tokenisation, stablecoin settlement, and on-chain payments from pilots into mainstream financial infrastructure. But banks cannot do this alone. They need regulatory clarity before they can participate at scale, and they need technology partners who can help them operate safely on programmable rails.

Fintechs are equally important because they build the practical interfaces between traditional finance and blockchain infrastructure: wallets, payment gateways, compliance tools, identity layers, stablecoin applications, and on- and off-ramp solutions. They are often faster at experimentation and product development, but they also need access to regulated institutions and clear rules of engagement.

Regulators have a critical role in setting the guardrails. Their role is not simply to restrict innovation, but to define the standards that allow responsible innovation to scale. That includes clarity around stablecoins, digital identity, Travel Rule compliance, tokenised assets, custody, cross-border flows, and accountability when financial activity moves across public blockchain rails.

These groups are co-dependent. Regulators need input from banks and fintechs to understand how the technology is being used. Banks need regulators to provide confidence and fintechs to provide infrastructure. Fintechs need banks for distribution, credibility, liquidity, and access to regulated financial flows.

The future of on-chain finance cannot be built by one side alone. It requires a concerted effort: regulators setting clear standards, banks bringing institutional governance and financial credibility, and fintechs building compliant infrastructure that makes those standards usable in practice.

Where do the biggest risks emerge when TradFi systems interact with DeFi rails? What kinds of loopholes or vulnerabilities could be exploited for fraud or regulatory arbitrage?

The biggest risks appear at the seams: where a regulated institution interacts with an unverified wallet, where a regulated asset moves into an unregulated pool, or where transaction data is lost between systems, chains, or jurisdictions.

One major risk is identity fragmentation. A user may be known to one institution but anonymous to another protocol. Another is asset provenance. Once a token leaves a controlled environment, institutions may lose visibility over whether it has passed through sanctioned wallets, mixers, exploited contracts, or high-risk counterparties.

There are also technical risks: smart contract vulnerabilities, bridge failures, oracle manipulation, compromised keys, and wrapped assets that may obscure the original source or obligations attached to the asset.

Regulatory arbitrage is another concern. Bad actors look for gaps between regimes, between centralised and decentralised infrastructure, and between pre-transaction checks and post-transaction monitoring. If one jurisdiction requires strict Travel Rule compliance and another has weak enforcement, value can be routed through the weakest point.

That is why programmable controls matter. The objective should be to close the gap before value moves, not discover the problem only after settlement.

How does combining verified identity, regulated stablecoins, and compliance-native infrastructure change the way financial institutions can operate on-chain?

It changes the conversation from ‘Can institutions use public blockchains safely?’ to ‘What new financial products can institutions build when trust is embedded into the rails?’

Verified identity gives institutions confidence that counterparties are accountable. Regulated stablecoins, tokenised deposits, and other verified assets provide a compliant unit of value. Compliance-native infrastructure connects the two so that value only moves when the participant, asset, and transaction meet the applicable rules.

This allows institutions to use the benefits of blockchain - programmability, transparency, faster settlement, and composability - without accepting the anonymity and compliance uncertainty that have historically limited institutional adoption. Instead of treating compliance as an external process, the rules become part of the transaction itself.

In practical terms, this can support regulated payments, tokenised asset settlement, treasury movement, cross-border transfers, and eventually AI-agent-driven payments, where autonomous systems will require embedded guardrails. In fact, if implemented properly, on-chain compliance can become more precise and enforceable than many controls used in today’s financial infrastructure.

Do institutions need to abandon legacy financial rails, or is the future more about interoperability? How realistic is seamless interaction across multiple blockchains and traditional systems?

Institutions do not need to abandon legacy rails. The future is interoperability.

Traditional rails will continue to matter because they are connected to bank deposits, central bank money, licensing regimes, settlement finality, consumer protection, and legal enforceability. At the same time, on-chain rails will become increasingly important because they offer programmability, transparency, automation, and new forms of settlement.

The challenge is not choosing one over the other. The challenge is making them work together safely. That requires identity standards that can travel across systems, asset standards that preserve provenance, messaging standards that carry compliance information, and governance rules that define who is responsible when value moves between environments.

Seamless interoperability across every blockchain and traditional system will not happen overnight. But practical interoperability is realistic if we focus on the trust layer, not only the chain layer. Institutions do not need every blockchain to be the same. They need common controls: verified participants, verified assets, enforceable rules, and auditability.

Looking ahead, what does ‘trust’ in on-chain finance look like five years from now? What still needs to be solved?

Five years from now, trust in on-chain finance will not mean trusting an institution blindly. It will mean being able to verify.

You will be able to verify that a participant is eligible. You will be able to verify that an asset is regulated, backed, and redeemable. You will be able to verify that a transfer complied with the relevant rules before settlement. Regulators and auditors will have better tools to trace risk, while users and institutions will expect privacy-preserving ways to prove compliance without exposing unnecessary personal data.

What still needs to be solved is coordination. We need stronger global standards for identity, Travel Rule implementation, stablecoin regulation, tokenised asset treatment, cross-chain interoperability, and legal finality. We also need better smart contract assurance and clearer governance for autonomous financial activity, especially as AI agents begin initiating transactions on behalf of individuals and businesses.

The future of on-chain finance will not be built on anonymity, and it will not be built by simply recreating closed banking networks. It will be built on verifiable trust: clean identity, clean money, enforceable rules, and shared governance. That is the foundation institutions need before on-chain finance can scale from innovation to infrastructure.

At the upcoming Point Zero Forum, what conversations or developments are you most interested in, and how do they connect to this broader shift toward compliant on-chain finance?

At Point Zero Forum, I am most interested in conversations that move beyond whether blockchain should be used in finance and focus instead on how it can be governed, scaled, and trusted.

The forum is especially relevant because it brings regulators, central banks, policymakers, banks, fintechs, and technology providers into the same room. That is the kind of public-private dialogue needed now. Compliant on-chain finance cannot be led by one group alone. Regulators need to define clear standards, banks need to bring institutional governance and liquidity, and fintechs need to build infrastructure that makes those standards usable in real-world transactions.

I will be particularly focused on conversations around stablecoins, tokenised assets, AI in financial services, agentic payments, digital identity, and regulatory frameworks. These are not separate themes. They are converging into one larger question: how do we build financial infrastructure where value can move instantly, transparently, and across borders while preserving accountability, compliance, and trust?

This interview is brought to you in partnership with Point Zero Forum and The Paypers. Point Zero Forum is the annual gathering of global central bankers, regulators, policymakers, and industry leaders shaping the future of financial services - and The Paypers is proud to spotlight the voices driving that conversation.

About author

Ceridwen Choo is CEO of Cleanverse, a compliance-native rules layer that interlocks verified identity with verified assets on every value transfer. Over the last 20 years, she’s helmed senior roles that delivered significant business and innovation outcomes with leading institutions, including DBS, HSBC, Mastercard, and Railsbank. 

In 2023, she launched Singapore’s first payment token and worked alongside regulators to help navigate emerging compliance and governance requirements. Ceridwen is a well-regarded female leader and a frequent speaker at forums.
 

About Cleanverse

 

Cleanverse is a compliance-native rules layer that interlocks verified identity with verified assets on every value transfer, enabling always-on compliance and traceability. By facilitating institutional-grade financial flows onto a space where transfers take place between known counterparties and verified funds, it sets the foundation for next-generation financial services led by AI agents.