Traditional compliance methods face an uphill battle in the world of cryptocurrencies. It turns out that pseudonymity, code-based transactions, and borderless systems don’t naturally mesh with laws designed for a world of centralized banks and paper trails.
But as crypto companies become more public, with an exchange and wallet provider Blockchain.comas well as new digital asset company Evernorth Holdings being the two latest news on Monday (October 20), compliance is becoming a priority, particularly in relation to anti-money laundering (AML) and financial crime (Fin Crime) frameworks.
After all, for crypto to be legitimized, its risk controls must be legitimate. Highlighting this reality, French regulators published Friday October 17 would have has launched a review of the world’s largest cryptocurrency exchange, Binance, with its MiCA EU license potentially at stake for some services.
In the United States, crypto companies navigate integrations with Office of Foreign Assets and Financial Crime Network (FinCEN), ensuring digital asset activities align with AML, know your customer (KYC), and sanction compliance protocols.
As crypto’s institutional footprint only grows, a broader conversation is emerging: what should compliance look like in a world where financial systems are code-driven, decentralized, and global by default?
Learn more: Crypto is coming for the cabin; Are financial teams ready?
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AI, API and the end of manual compliance
The most promising change that could drive compliance modernization concerns data, which is produced in massive, continuous and interoperable formats, particularly with regard to payments and financial transactions. Old anti-money laundering frameworks, born in the 20th century, assumed that risk could be contained within separate institutions and analyzed in batches. Innovations like blockchain shatter this assumption. Value now moves across hundreds of platforms, each generating open but pseudonymous data. To make sense, compliance systems may increasingly need automation, interoperability and intelligence.
Industry responses to a request for comment (RFC) from the U.S. Treasury on how to manage cryptocurrency risks for regulated financial institutions, particularly under the new GENIUS Act, could provide some insight into what a compliance-focused crypto landscape might look like.
Many crypto companies, including large public companies such as Coinbase, advocate an AML architecture based on blockchain analytics, artificial intelligence (AI), APIs, and decentralized identity. Rather than simply requiring the reporting of individual transactions, crypto industry stakeholders argued in their written responses for analytics that identify suspicious patterns in chains, wallets, and exchanges in real time. This reflects a move towards a “network intelligence” model of AML.
At the same time, companies say traditional KYC regimes require repetitive identity checks and data storage. Coinbase, for example, suggested that DIDs and zero-knowledge proofs (ZKPs) could securely validate identities, reduce duplication, and minimize privacy exposure, while maintaining compliance integrity.
AI plays a central role here. Modern compliance platforms deploy machine learning to map behavior patterns, detect unusual fund movements, and predict emerging risks across channels. APIs connect this information to exchanges, custodians and regulators, creating networks of shared intelligence. Compliance stops being a silo: it becomes an ecosystem.
A PYMNTS Intelligence report, “From Experiment to Imperative: US Product Leaders Bet on Gen AI,” captures this pivot to AI well, revealing that 85% of product managers surveyed anticipated better regulatory compliance with AI.
However, these regulatory openings can be supported by strategic considerations. First, as one of the largest regulated crypto exchanges in the United States, Coinbase itself has invested heavily in oversight, compliance infrastructure, and legal defense. By demanding higher technical standards and recognizing advanced tools, it creates a competitive gap: small entrants may find it difficult to invest at scale.
Learn more: Treasury Guidance Chart Compliance Course for Crypto CFOs
Identity as the new layer of compliance
Perhaps the most radical innovation concerns digital identity. Compliance has always depended on the knowledge of the other party in a transaction. But in the world of blockchain, identity can no longer mean exposure. Instead, cryptographic tools such as zero-knowledge proofs and decentralized identifiers allow participants to prove their eligibility or legitimacy without revealing personal data.
As compliance technologies proliferate, the next frontier is interoperability. Just as blockchains aim for transparent communication between chains, compliance systems must learn to communicate with each other. Whether it’s the FATF Travel Rule, global data sharing APIs, or privacy attestations, the goal is to make compliance transferable across jurisdictions and platforms.
The convergence of blockchain, AI, and digital identity portends a future of “self-enforcing” compliance: systems that automatically verify legitimacy and reject illegitimate actions at the protocol level.
And although regulators generally move more slowly than innovators, the incentives to implement appropriate AML and financial crime controls are only growing. As PYMNTS mentioned earlier, a report from the Financial Action Task Force (FATF) found that “most illicit on-chain activity now involves stablecoins.”
