Peril or Promise? Prospects in the US Cryptocurrency Sector

Cryptocurrencies and their underlying Blockchain software (‘crypto’) have come under increasing attention from agencies and regulators as sources of potential financial crime and regulatory risk in recent years, despite their potential to stimulate further innovation and growth in the economy. The US experience has been a leading example of this, with some federal level agencies seeking to combat money laundering, terrorist financing, sanctions evasion and fraud risks amongst those who use and promote crypto, whilst others seek to encourage its future development. 

Some US FinTechs fear that this paradoxical mix of support and attack will deter the growth of the sector. However, this paper is more optimistic. US firms involved in, or curious about, crypto can do much to mitigate the risks they face without facing sensational dangers. As a recent FinTech FinCrime Exchange (FFE) White Paper on the UK crypto sector indicated, financial crime risks in the crypto sector are actually much like those in fiat currencies, with similar typologies and patterns - especially in terms of customer fraud. We concluded therefore that a financial crime framework, based on a robust and bespoke risk assessment, is the most reliable way to tackle potential misuse whilst also demonstrating a compliant approach to the authorities.