Opinion by: Mike Haley, CEO of Cifas
Whereas the crypto {industry} is revolutionizing the world of finance, there’s an underlying actuality effervescent beneath the floor. Hitting document ranges, cryptocurrency scams reportedly accounted for $9.9 billion in 2024 — with 2025’s forecast making for even bleaker studying.
Whether or not within the type of “previous wine in new bottles” frauds — corresponding to Ponzi and pump-and-dump schemes or new crypto-specific fraud typologies like tackle poisoning — the worldwide fraud epidemic is hitting the {industry} exhausting and undermining client confidence.
Criminals are more and more abusing the sector to launder the fraud proceeds generated within the conventional finance (TradFi) sector. This creates compliance challenges for companies maintaining tempo with evolving Anti-Cash Laundering (AML) guidelines. In spite of everything, practically 90% of crypto registration functions within the UK fail because of weak AML and fraud controls.
Crypto sector abuse
This abuse of the crypto sector will not be going unnoticed by an {industry} working exhausting to scrub up its picture within the eyes of world regulators, lots of whom are beginning to look to manage the sector past the AML perimeter. Efforts by particular person companies — like {industry} rip-off flagging instruments and disruption operations — laudable although they might be, could have restricted impact in isolation.
The {industry} wants a a lot bolder method to anti-financial crime information sharing.
Cross-sector public-private information sharing to deal with fraud is quick turning into the norm within the TradFi sector. Whether or not through obligatory anti-scam information sharing between monetary providers and telcos in Singapore or industry-led voluntary schemes in Australia and the UK, information sharing is accepted globally as one of many key defenses in opposition to international fraud.
Associated: Blockchain compliance tools can slash TradFi costs: Chainlink co-founder
We will solely put a dent on this international crime wave by becoming a member of the dots alongside the fraud worth chain. As fraud adapts to the brand new monetary panorama internationally, what’s lacking on this chain is the digital property group. Bringing the group into present data-sharing efforts is not going to solely assist to construct a robust ecosystem however can even profit the {industry} itself.
Principle to motion
There are three issues the {industry} ought to do.
First, the present restricted use of crypto as a mainstream cost medium means even probably the most dedicated crypto prison can not exist in isolation. The on-ramping and off-ramping between crypto and fiat currencies are key intervention factors within the battle in opposition to crypto-linked fraud. With neither facet seeing the entire image, failing to share information impedes efforts.
Second, utilizing crypto within the fraud laundering chain creates an AML problem. With regulators cracking down on exchanges and new guidelines beginning to chew, the {industry} must construct defenses in opposition to fraud proceeds laundering. It can not do that with out the important information flows wanted to identify and block people from getting into their ecosystem, information which it should supply from additional up the worth chain.
Third, whereas the desire to deal with fraud inside the digital property group is rising, compliance as a occupation inside the sector is a nascent self-discipline. The {industry} would profit from exhausting information and the expertise of established fraud prevention specialists throughout different sectors, for whom the forms of rising frauds are “enterprise as ordinary.”
Whereas the arguments in favor of cross-industry information sharing to forestall crypto-linked fraud are clear, what must occur to implement the speculation?
Accelerating collaboration
The UK affords a probably hospitable coverage setting for the {industry}’s first forays into cross-sector information sharing.
From a authorized perspective, the UK privateness regulator, the Data Commissioner’s Workplace, just lately stated unequivocally that “information safety will not be an excuse when tackling fraud and scams.” That is significantly related to current crimes, one in every of which noticed scammers steal $1.2 million by posing as law enforcement and crypto pockets hosts to trick victims into revealing private info.
Coupled with current legislative adjustments to the info privateness regime within the type of the Knowledge (Use and Entry) Act 2025 — which establishes crime prevention as a “acknowledged reputable curiosity” — the authorized argument for sharing couldn’t be clearer.
Subsequent, the regulatory horizon for digital asset regulation within the UK gives carrots and sticks for fraud prevention and information sharing. The UK Chancellor’s announcement on future regulation strongly suggests the digital property {industry} can be sure by the identical client safety guidelines because the TradFi sector. It’s troublesome to think about UK client safety in opposition to fraud and not using a cross-industry data-sharing ingredient.
The carrot can also be there with the Monetary Conduct Authority — and the said future digital asset regulator — stating information sharing is a key device within the battle in opposition to fraud proceeds laundering.
Lastly, the UK has a wealthy and established monetary crime data-sharing ecosystem, with sturdy public-private, intra-industry and cross-sector collaboration, together with by the Joint Cash Laundering Intelligence Taskforce. Opening these initiatives to the digital property {industry} has already began, and with some authorities and regulatory backing, it could possibly be accelerated.
The crypto and digital asset group is aware of solely too nicely the reputational and regulatory dangers posed by the fraud emergency. However recognition alone will not be sufficient, and efforts should not stay siloed. Cross-industry information sharing is a key enabler of efficient fraud prevention worldwide. Given the UK’s conducive setting, it’s uniquely positioned to steer by instance.
Opinion by: Mike Haley, CEO of Cifas.
This text is for normal info functions and isn’t meant to be and shouldn’t be taken as authorized or funding recommendation. The views, ideas, and opinions expressed listed here are the creator’s alone and don’t essentially mirror or characterize the views and opinions of Cointelegraph.
