In recent years more traditional financial institutions have started to explore digital assets and their related products. Crypto businesses are consistently exploring and extending to new jurisdictions. Meanwhile, that means they are exposed to more risk and bad actors are persistent in seizing fresh opportunities for criminal activities, with levels of cryptocurrency theft tipping over USD 4.7 billion in 2022.
This makes the role of cryptocurrencies in the financial markets more significant while also becoming a headache entangled with multiple challenges for businesses, regulators and law enforcement teams who need visibility into these services.
One of the main underlying challenges is the lack of skill and talent across the industry.
If we consider that we are not even nearly at mass adoption for crypto, then the correlating logic is that only a small percentage of the population really understands the technology, its applications, and its risks.
This has an important bearing on the crypto sector.
‘Policy leaders, legislators, financial institutions and professional players in this evolving sector are looking for a deeper understanding of blockchain, transactions, and its characteristics to use and manage potential risks efficiently’, says Hedi Navazan, Head of Compliance and Regulatory Affairs at Crystal. ‘We designed and launched crypto training courses in direct response to the demand from several partners who were actively seeking to upskill their teams across all levels of understanding – from the fundamentals to the more advanced concepts.’
In its recommendations on how to tackle crypto crime and money laundering, Europol highlights the need for more training and an increased general understanding of crypto assets.
‘It is recommended that law enforcement officers even in low-resource countries can make use of free courses and resources available online. This will help them to broaden their knowledge and become familiar with the terminology around crypto assets and the different ways of storing them. More events, seminars and workshops will help law enforcement and other stakeholders to share and acquire knowledge.’
The Europol report also calls for more work on understanding acronyms and terms used in the crypto industry.
The increasing use of crypto-specific technical terms and acronyms has spawned a brand-new language. In as much as this is alienating for an outsider, it is vital that anyone hoping to make sense of the industry, such as a potential investor, must seek education to understand the general terms and concepts.
This is not restricted to investors. All stakeholders in the crypto industry from investors, professionals, law enforcement agents, and prosecutors must understand the language used.
Everyday users need to understand the risks of investing in crypto assets to avoid scams and theft while law enforcement officers must understand the language used by criminals to find and arrest them. For international cooperation in law enforcement to be successful there must be a common simple language. And prosecutors need to be able to explain clearly to judges how money was laundered through the crypto assets if they want a successful conviction.
It is equally important for crypto professionals who may have coined some of these terms to seek continued training and keep up to date with developments to broaden their knowledge across multiple jurisdictions. The benefits of this are spoken for, but it’s worth noting that with the increased understanding also come new business opportunities and innovation.
TradFi and payments services are increasingly overlapping with crypto. In June 2023 BlackRock announced a new bitcoin ETF project, while Deutsche Bank has been working on its digital asset platform since 2021.
Hong Kong, meanwhile, is eager to position the country as a crypto hub, having already launched its central bank digital currency. And its Monetary Authority (HKMA) has reportedly questioned why HSBC and Standard Chartered have not taken on more digital asset clients.
There has been speculation that since the banking crisis in early 2023, with the collapse of Silicon Valley, Signature, and Credit Suisse Banks, the crypto industry may offer an attractive alternative to bankers looking for new roles.
The main question that traditional finance and payments services should be asking then, is not if they need to train up to get on top of crypto concepts, but when.
Episodes like the FTX-crash in 2021 highlighted a growing concern around the culture of non-compliance. Or rather the lack of interest in governance and internal controls.
Since then, exchanges keen to operate on a global scale have invested more heavily in compliance and borrowed age-old learnings from traditional finance. Consequently, there has been a constant movement of TradFi talent into crypto, especially into regulatory and compliance roles.
The writing is really on the wall then. The colliding of TradFi and crypto has already happened. If banking and payments professionals wish to remain at the top end of their game, having a sound knowledge of cryptocurrencies and blockchain will ultimately give them the edge.
Learn everything about crypto compliance and investigations from Crystal’s expert team including how to investigate multi-blockchain transactions, monitor cryptocurrencies for potential risk, and build visualizations to support investigations.
For more details on training courses visit Crystal’s School of Crypto Compliance and Investigations.
With nearly 20 years of law enforcement experience behind him, Scott also has numerous professional qualifications and memberships including a Master’s Level Certification in Advanced Investigative Practice (APCIP). Scott successfully dealt with high-profile and sensitive investigations, with a speciality in Complex Fraud, AML, Cybercrime and Financial Investigations.
Crystal Blockchain Analytics provides an all-in-one blockchain analytics tool to customers in the digital asset industry, banking, law enforcement and regulatory sectors. We enable financial services and VASPs to meet global anti-money laundering requirements through crypto transaction monitoring and risk assessment. Customers in law enforcement and regulatory spheres leverage our technology and data to track the movement of thousands of cryptocurrencies in real-time to identify illicit flows. Our platform is available as a free demo, SaaS, and API.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now