Compliance weekly – 24 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.


As BTC is dipping its toes in the US$30,000 range and heading towards its worst week in 8 months, FTM is now the third largest DeFi ecosystem in total locked in value. As more growth in the crypto market will naturally lead to increased regulation, the UK Treasury has proposed a new set of crypto regulations that proposes to remove blockchain and distributed ledger technology (DLT) references from the definition of crypto assets. This comes in anticipation of future proofing crypto regulation as most crypto assets currently use distributed ledger technology (DLT), this might change as the technology and industry evolve. Therefore, the government proposed to remove the reference to DLT from the definition of qualifying crypto assets.

Some of the major exchanges will now come under regulatory scrutiny as the Korean Financial Intelligence Unit (FIU) will join forces with the Financial Services Commission to examine whether they have anti-money laundering systems and other necessary measures in place. These exchanges include Bithumb, Upbit, Coinone and Korbit and will be under greater scrutiny where they do not meet the requirements. The Monetary Authority of Singapore (MAS) has issued its guidelines on the provision of digital payment tokens and shut down cryptocurrency automatic teller machines.


As it has almost been a year since the last diamond was auctioned in crypto, Sotheby’s is now auctioning a rare 555.55-carat diamond and accepting BTC, ETH and USDC as payment for the diamond titled Enigma. BitMEX is in the process of acquiring a traditional bank (Bankhaus von der Heydt) to deliver on its Banking 2.0 vision of “a regulated crypto products powerhouse in the heart of Europe”.  Binance and Tornado Cash is under the spotlight as it is alleged that the exchange and mixer are being used to obscure the money trails of launderers. Multichain has suffered a critical vulnerability which resulted in a US$1,4M hack of its user’s funds however, the hacker has returned US$1M and kept the rest of the crypto for tips in returning the victim’s money.

An increasing trend has also been spotted as Monero is being labelled the launderers choice of coin due to its anonymity. In a new scam making the rounds, fraudsters are using Amazon branding to steal BTC from victims. The scam is built on the premise of a fake Amazon token that victims are induced to buy with a limited time offering, this is then exploited by users to send BTC to an address and they end up with receiving nothing in return. Chainalysis has issued a warning that an increasing amount of malware is being used to steal funds from victim’s crypto wallets.  


The UK’s Financial Conduct Authority (FCA) has published a summary of all fines issued during the calendar year ending 2021 that totaled £567,765,219.95. In China, police have arrested 8 individuals for a US$7.8M rug pull and Interpol has also arrested 11 gang members linked to a BEC (business email compromise). 


It’s rare to have the opportunity to be at the cutting edge of an entirely new industry. Whilst many view crypto as just another asset class, those of us who are deeply involved in the space know that we’re witnessing a paradigm shift.

This is going to drive fundamental changes in approach when it comes to many areas of traditional financial services – compliance, corporate governance and insurance, to name just a few. It is, therefore, more important than ever to consult with experts in the field who are helping to shape these changes.


With markets dipping and exchanges being targeted by bad actors, we see some governments calling for an increased definition of virtual assets to ensure all shapes and forms are regulated. Despite the increased regulation this does not prevent bad actors from conjuring new schemes and finding new ways to launder crypto funds and cover their trail.

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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