Compliance weekly – 17 January 2022

Why compliance is important in the digital asset industry

In this report we observe and track all relevant events that have unfolded in the compliance and digital asset space in the past seven days.


BTC’s trading volume has dipped over the past week and has made space for other crypto and tokens to grow such as DOGE that spiked by 11% after announcing Tesla will accept DOGE as payment for it’s merch; and OpenSea that will most likely exceed USD$6B transactions by the end of January. This signals the increasing need for use cases of NTF’s, such as Access Pass by Lüm which will enable users to collect and trade their favorite artists’ access passes and allow them to unlock music collectibles, experiences and rewards in the real and digital worlds. 

As crypto exchanges are voluntarily reporting transactions to various revenue authorities such as the Internal Revenue Service (IRS), taxpayers need to be on their toes in the coming tax season and may need to report additional income generated as part of their trading in the bull run. CoinDesk has issued an opinion piece that details the call for regulatory clarity of these coins to maintain integrity and stability. Stablecoins are a “class of cryptocurrencies that attempt to offer price stability and are backed by a reserve asset” such as the US Dollar. With more and more of these stables popping up by the day, one can assess the reliable stablecoin by confirming whether it is “regulated by one of the main global regulatory bodies, specifically for AML & KYC, subject to regular third-party audits, insured and, backed by a physical currency.” A UK judiciary advisor has also called for English law to keep pace with crypto.     


According to a report issued on, there has been a 40% surge in hacking incidents over the past year, totaling a whopping US$400M. This follows the Economic Affairs Committee’s (EAC) report on a Central Bank Digital Currencies, that found that there is no need for the UK to have a central bank / CBDC and may even create more problems than the solutions it solves. The Chair of the Economic Affairs committee stated that: “The introduction of a UK central bank digital currency would have far-reaching consequences for households, businesses, and the monetary system. We found the potential benefits of a digital pound, as set out by the Bank of England, to be overstated or achievable through less risky alternatives … The concept seems to present a lot of risk for very little reward. We concluded that the idea was a solution in search of a problem.” 

The Federal Deposit Insurance Corporation (FDIC) and the Financial Crimes Enforcement Network (FinCEN), has launched a Tech Sprint that will develop solutions for financial institutions and regulators to help measure the effectiveness of digital identity proofing. The project will seek to increase efficiency and account security; reduce fraud and other forms of identity-related crime, money laundering, and terrorist financing; and foster customer confidence in the digital banking environment. According to the Central Bank of Iran (CBI), the country will now allow crypto payments for international trade. Alireza Peyman Pak, the head of Iran’s Trade Development Organization confirmed the report and said: “[w]hat we have agreed with the Central Bank is the use of blockchain systems and cryptocurrencies in the international trade environment.” Spain is now lobbying to become the new BTC hub and “position itself as a safe destination for investments in cryptocurrencies to develop a flexible, efficient and safe sector.”


In a new crypto scam, scammers are being directed by an impersonator to send crypto to them through a cryptocurrency ATM. This is how it works: the scammer calls you on your mobile and impersonates a government official or a representative from a lottery service and requests that you withdraw cash from your fiat account and deposit crypto to them through a cryptocurrency ATM by using a QR code that they sent to you which contains their wallet address. It has been over a month since the December 4th US$200M BitMart hack, and the victims are still waiting to get their money back despite the exchange’s undertaking “to cover the incident and compensate affected users” by mid December.

CityDAO which previously claimed that it was the first Decentralized autonomous organization (DOA) to own land, has been hacked and made a fake “land drop” getting away with US$95,000 ETH. The Financial Action Task Force (FATF) has ruled that crypto exchanges take responsibility and implement anti-money laundering regulations including the Travel Rule, which requires that crypto exchanges share customer data with each other. 


The Russian Federal Security Service (FSB) has arrested members linked to the REvil ransomware gang. Binance has pledged its full support to Pakistan’s Federal Investigation Agency (FIA) in its investigation of a multi-million dollar scam involving 11 apps that used Binance’s blockchain address. Tether freezed US$150M in USDT by blacklisting 3 addresses in compliance with law enforcement’s requests linking the addresses to cyber attacks. In India, the Enforcement Directorate (IED) has seized assets worth approximately $5 million in connection with an alleged cryptocurrency scam involving Morris coin that has duped investors out of US$162M. Office of Foreign Assets Control (OFAC) has settled with Sojitz Limited HK as it allegedly engaged in offshore trading and cross-border trade financing. Sijitz has agreed to pay US$5,228,298 to settle its potential civil liability for apparent violations of the Iranian Transactions and Sanctions Regulations (ITSR).


As the digital asset space evolves it’s extremely important that you ensure you take into account all the factors to ensure you are fully compliant with evolving regulations. There is often no golden rule when it comes to compliance as this is a new industry and it is therefore extremely important to work with individuals who are experienced in both traditional compliance and digital assets to create the new standards for digital asset compliance.


This week we see an increasing trend of jurisdictions accepting crypto as legal tender and stakeholders calling for clarity of regulation. There have also been some cases reporting new crypto scams and crypto exchanges pledging their support to legal and regulatory agencies in the hunt for bad actors.   

If you have any questions about crypto compliance, please feel free to have a look at our services or contact us to set up a free call to discuss your needs.

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