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Cryptocurrency & Digital Asset Regulatory Compliance
Real-world expertise for complex compliance challenges in the digital assets space.
Compliance teams require a reliable partner with real-world expertise in digital assets to help their senior management and outside counsel understand the potential risks and specific regulatory obligations.
Drawing on their extensive experience navigating complex regulatory and compliance matters, FTI Technology’s Blockchain & Digital Assets experts provide tailored solutions for regulatory compliance catering to a diverse range of clients and industries, including emerging crypto-native startups, established finance and banking industry leaders, FinTech solutions providers, traditional organizations seeking to expand their operations to include digital assets and legal advisors seeking practical expertise for their clients.
Our approach to digital asset compliance is tailored to the specific needs of the company and can include:
Anti-Financial Crime
Many organizations have robust measures to prevent, detect and report financial crimes. These programs should be reviewed periodically and updated to address the evolving risks associated with digital assets.
- Blockchain transaction monitoring
- Customer risk rating models
- Policy and procedure reviews
- Lookback and remediation support
- Blockchain investigations, KYC and digital identity reviews
- Sanctions screening
- List and parameter management, third-party exposure, DAO and privacy pool risks, geolocation monitoring and IP/VPN controls
Anti-Fraud
Updating existing anti-fraud programs will help organizations ensure digital assets are used for intended purposes, enhance customer safety and protect business processes.
- Developing customer education and alert programs
- Mitigating ID verification risks, including synthetic ID fraud
- Identifying internal fraud risks
- Combating transaction-based fraud, including:
- Account funding fraud, including clawback and NSF schemes
- Cryptocurrency payments fraud
- Pig butchering and romance scams
- Rug pulls
- “Investment” scams and pyramid schemes
- Elder financial exploitation
- Third-party cryptocurrency applications and fictitious trading websites
- Cryptocurrency marketing scams
- Token market manipulation schemes
Product Safety & Certification
Organizations must demonstrate an unwavering commitment to delivering quality, safe digital asset products to establish trust with customers and regulators. FTI Technology’s Blockchain & Digital Assets team is adept at helping organizations fully grasp, evaluate and articulate the complex facets of product safety and certification.
- Product assessment and certification process
- Technical blockchain and digital asset evaluations
- Utility and monetization
- Developer due diligence
- Blockchain security
- On-chain data privacy and protection (e.g., GDPR and GLBA)
- Blockchain-focused AML, fraud and sanctions risks
- Privacy features (e.g., stealth, zero knowledge and ring signatures)
Safety & Soundness
In the digital asset world, your community is a critical element to your success and ensuring that community engagement is conducted on secure digital asset platforms will help attract and retain loyal customers.
FTI’s Blockchain & Digital Assets Practice can help with:
- Proprietary address monitoring for high-risk activity
- Monitoring for wash trading, pump and dump and other market manipulation schemes
- Protecting against insider trading
- Appropriate disclosures and customer notices
- Developing Proof-of-Assets and Proof-of-Reserves regulatory strategies
- Implementing controls related to segregation and protection of customer assets
- Engaging with qualified experts to assess overall safety posture in the areas of finance, operations, security, marketing and customer support
Licensing & Examinations
In a constantly changing global regulatory environment, digital asset service providers face unique challenges in obtaining and maintaining licenses across different jurisdictions. FTI Technology’s Blockchain & Digital Assets team deeply understands regulatory standards, licensing processes, examination requirements and how to prepare organizations for interactions with regulatory bodies in the digital asset industry.
Some offerings include:
- Licensing preparedness assessments
- Federal examination preparedness assessments
- Pre-examination compliance reviews
Vendor and Partner Compliance
Comprehensive compliance programs build trust with partners and suppliers. FTI Technology’s Blockchain & Digital Assets team provides extensive support to customize and strengthen compliance efforts, offering thorough due diligence for diverse business scenarios.
Some offerings include:
- Developing vendor selection criteria to address utility, user interface, data integration, platform customization, rules tuning and use and storage of sensitive customer and transactional information
- Assessing the compliance posture of partner companies and relevant third-party risk exposure
Select Engagements:
- A global cryptocurrency exchange hired FTI Consulting to review a complex internal money laundering investigation, assess its BSA/AML compliance program, and conduct a proactive lookback investigation into alerted activity.
- The cryptocurrency subsidiary of a large U.S.-based fintech company, a registered broker-dealer, needed an independent review of its BSA/AML program due to a consent order from the state regulator. FTI Consulting assessed governance, risk assessment, training, customer onboarding, transaction monitoring, and overall compliance, including the fraud program.
- FTI Consulting successfully guided a digital asset exchange through many U.S. and global regulatory examinations and investigations spanning AML, OFAC, fraud, customer protection, cybersecurity, customer support, and enterprise risk programs, showcasing the breadth of its expertise and the value of its services.
Related Resources
Compliance in the Digital Assets Ecosystem
The emergence of cryptocurrencies, NFTs, and other digital assets presents unique opportunities and challenges for blockchain-centric companies, traditional financial institutions, and legal teams worldwide.
The decentralized nature of crypto-native companies poses specific challenges that require technology-centered due diligence. These challenges extend beyond traditional technology and finance, including custody, layer-1 protocols, smart contracts, dApps, token offerings, DeFi projects, crypto mining operations, and crypto exchanges. FTI Technology’s services are designed to effectively address these unique challenges, offering expertise and insights that surpass and complement traditional document-based due diligence assessments.
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