traditional compliance Methods face an uphill battle in the world of cryptocurrencies. It turns out that pseudonymization, code-driven transactions, and borderless systems do not naturally conform to rules designed for a world of central banks and paper trails.
But with the increase of cryptocurrency companies Go publicwith the exchange provider and wallet Blockchain.combesides Newly formed With digital asset company Evernorth Holdings being the latest news on Monday (October 20), compliance has become a priority, particularly around anti-money laundering (AML) and financial crime (Fin Crime) frameworks.
After all, to be cryptocurrencies legitimateRisk controls must be legitimate. Confirming this reality, French regulatory authorities decided on Friday (October 17) It is said A review has begun of the world’s largest cryptocurrency exchange, Binance, with its MiCA EU license potentially hanging in the balance for certain services.
In the United States, cryptocurrency companies are integrating with… Office of Foreign Assets and the Financial Crimes Enforcement Network (Financial Crimes Enforcement Network) frameworks, ensuring digital asset activities are compliant with anti-money laundering, know your customer (KYC), and sanctions compliance protocols.
As the institutional footprint of cryptocurrencies grows, a broader conversation is emerging: what compliance should look like in a world where… Financial systems Is it code-based, decentralized, and global by default?
Read more: Cryptocurrencies are coming to the booth; Are the finance teams ready?
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AI, APIs and the end of manual compliance
A promising transformation that may advance compliance modernization is data, which is produced in massive, persistent, and interoperable forms, especially around payments and financial transactions. Old AML frameworks, born in the twentieth century, assumed that risks could be contained within separate institutions and analyzed in batches. Innovations like blockchain break down this assumption. Value now moves across hundreds of platforms, each generating open but pseudonymous data. To understand this, compliance systems may increasingly need automation, interoperability and intelligence.
Industry Responses to A Request for Comment (RFC) By the US Treasury on how to address crypto risks for regulated financial institutions, particularly under the new GENIUS Act, could provide a hint as to what a compliance-first crypto landscape might look like.
Many cryptocurrency companies, including large, public companies like Coinbase, are advocating an AML architecture built on blockchain analytics, artificial intelligence (AI), APIs, and decentralized identity. Rather than simply requiring reporting of individual transactions, cryptocurrency industry stakeholders argued in their written responses for analytics that identify suspicious patterns across chains, wallets, and exchanges in real time. This reflects the shift towards a “network intelligence” model for combating money laundering.
Meanwhile, companies claim that traditional KYC systems require frequent identity checks and data storage. For example, Coinbase has suggested that digital IDs and zero-knowledge proofs (ZKPs) can securely validate identities, reduce duplication, and reduce privacy exposure — all while maintaining compliance integrity.
Artificial intelligence plays a central role here. Modern compliance platforms deploy machine learning to map behavioral patterns, detect unusual money movements, and predict emerging cross-chain risks. Application programming interfaces (APIs) connect these insights to exchanges, custodians and regulators, creating networks of shared intelligence. Compliance is no longer a silo – it is an ecosystem.
PYMNTS Intelligence Report,”From experiment to determinism: American product leaders are betting on the new generation of artificial intelligence“, exemplifies this pivot to AI well, finding that 85% of product leaders surveyed expected better regulatory compliance thanks to AI.
However, these regulatory initiatives may be supported by strategic considerations. First, as one of the largest regulated cryptocurrency exchanges in the United States, Coinbase itself has invested heavily in monitoring, compliance, and legal defense infrastructure. By pushing for higher technical standards and recognition of advanced tools, it creates a competitive moat: smaller participants may struggle to invest on a large scale.
Read more: Treasury Guideline Charts Compliance Course for CFOs in Crypto
Identity as the new compliance layer
Perhaps the most radical innovation is unfolding around digital identity. Compliance has always depended on knowing who is on the other side of the deal. But in the blockchain world, identity no longer means exposure. Alternatively, cryptographic tools such as zero-knowledge proofs and decentralized identifiers allow participants to prove eligibility or legitimacy without revealing personal data.
As compliance technologies proliferate, the next frontier is interoperability. Just as blockchains enable seamless cross-chain communications, compliance systems must learn how to talk to each other. Whether through the FATF Travel Rule, global data sharing APIs or privacy certificates, the goal is to make compliance transferable across jurisdictions and platforms.
The convergence of blockchain technology, artificial intelligence, and digital identity points to a future of “self-enforcing” compliance: systems that automatically verify legitimacy and reject illicit actions at the protocol level.
Although regulators typically move more slowly than innovators, incentives to enact appropriate controls to combat money laundering and financial crime are growing. As PYMNTS previously covered, Report from Financial Action Task Force The FATF found that “most illicit on-chain activity now involves stablecoins.”
