Opinion by: Mike Haley, CEO of Cifas
While the crypto {industry} is revolutionizing the world of finance, there’s an underlying actuality effervescent beneath the floor. Hitting document ranges, cryptocurrency scams reportedly accounted for $9.9 billion in 2024 — with 2025’s forecast making for even bleaker studying.
Whether within the type of “previous wine in new bottles” frauds — resembling Ponzi and pump-and-dump schemes or new crypto-specific fraud typologies like handle poisoning — the worldwide fraud epidemic is hitting the {industry} exhausting and undermining shopper confidence.
Criminals are more and more abusing the sector to launder the fraud proceeds generated within the conventional finance (TradFi) sector. This creates compliance challenges for companies protecting tempo with evolving Anti-Money Laundering (AML) guidelines. After all, practically 90% of crypto registration purposes within the UK fail due to weak AML and fraud controls.
Crypto sector abuse
This abuse of the crypto sector isn’t going unnoticed by an {industry} working exhausting to scrub up its picture within the eyes of worldwide regulators, a lot of whom are beginning to look to control the sector past the AML perimeter. Efforts by particular person companies — like {industry} rip-off flagging instruments and disruption operations — laudable although they might be, can have restricted impact in isolation.
The {industry} wants a a lot bolder strategy to anti-financial crime knowledge sharing.
Cross-sector public-private knowledge sharing to deal with fraud is quick turning into the norm within the TradFi sector. Whether through obligatory anti-scam knowledge sharing between monetary companies and telcos in Singapore or industry-led voluntary schemes in Australia and the UK, knowledge sharing is accepted globally as one of many key defenses in opposition to world fraud.
Related: Blockchain compliance instruments can slash TradFi prices: Chainlink co-founder
We can solely put a dent on this world crime wave by becoming a member of the dots alongside the fraud worth chain. As fraud adapts to the brand new monetary panorama internationally, what’s lacking on this chain is the digital belongings group. Bringing the group into present data-sharing efforts won’t solely assist to construct a powerful ecosystem however can even profit the {industry} itself.
Theory to motion
There are three issues the {industry} ought to do.
First, the present restricted use of crypto as a mainstream fee medium means even probably the most dedicated crypto felony can’t exist in isolation. The on-ramping and off-ramping between crypto and fiat currencies are key intervention factors within the combat in opposition to crypto-linked fraud. With neither aspect seeing the entire image, failing to share knowledge impedes efforts.
Second, utilizing crypto within the fraud laundering chain creates an AML problem. With regulators cracking down on exchanges and new guidelines beginning to chunk, the {industry} must construct defenses in opposition to fraud proceeds laundering. It can’t do that with out the important knowledge flows wanted to identify and block people from getting into their ecosystem, knowledge which it should supply from additional up the worth chain.
Third, whereas the desire to deal with fraud inside the digital belongings group is rising, compliance as a career inside the sector is a nascent self-discipline. The {industry} would profit from exhausting knowledge and the expertise of established fraud prevention specialists throughout different sectors, for whom the forms of rising frauds are “enterprise as ordinary.”
While the arguments in favor of cross-industry knowledge sharing to stop crypto-linked fraud are clear, what must occur to implement the speculation?
Accelerating collaboration
The UK presents a doubtlessly hospitable coverage surroundings for the {industry}’s first forays into cross-sector knowledge sharing.
From a authorized perspective, the UK privateness regulator, the Information Commissioner’s Office, just lately said unequivocally that “knowledge safety isn’t an excuse when tackling fraud and scams.” This is especially related to current crimes, certainly one of which noticed scammers steal $1.2 million by posing as regulation enforcement and crypto pockets hosts to trick victims into revealing private data.
Coupled with current legislative adjustments to the info privateness regime within the type of the Data (Use and Access) Act 2025 — which establishes crime prevention as a “acknowledged official curiosity” — the authorized argument for sharing couldn’t be clearer.
Next, the regulatory horizon for digital asset regulation within the UK supplies carrots and sticks for fraud prevention and knowledge sharing. The UK Chancellor’s announcement on future regulation strongly suggests the digital belongings {industry} can be sure by the identical shopper safety guidelines because the TradFi sector. It is troublesome to think about UK shopper safety in opposition to fraud with out a cross-industry data-sharing aspect.
The carrot can also be there with the Financial Conduct Authority — and the said future digital asset regulator — stating knowledge sharing is a key instrument within the combat in opposition to fraud proceeds laundering.
Finally, the UK has a wealthy and established monetary crime data-sharing ecosystem, with strong public-private, intra-industry and cross-sector collaboration, together with via the Joint Money Laundering Intelligence Taskforce. Opening these initiatives to the digital belongings {industry} has already began, and with some authorities and regulatory backing, it could possibly be accelerated.
The crypto and digital asset group is aware of solely too effectively the reputational and regulatory dangers posed by the fraud emergency. But recognition alone isn’t sufficient, and efforts should not stay siloed. Cross-industry knowledge sharing is a key enabler of efficient fraud prevention worldwide. Given the UK’s conducive surroundings, it’s uniquely positioned to guide by instance.
Opinion by: Mike Haley, CEO of Cifas.
This article is for common data functions and isn’t meant to be and shouldn’t be taken as authorized or funding recommendation. The views, ideas, and opinions expressed listed below are the writer’s alone and don’t essentially mirror or symbolize the views and opinions of Cointelegraph.
