Data Sharing Emerges as Key Compliance Strategy in Crypto Sector

Data sharing is becoming a pivotal element in the compliance strategies of the cryptocurrency industry as global regulators and market participants seek to mitigate the risks associated with fraud and money laundering. With reported crypto scams reaching $9.9 billion in 2024 and nearly 90% of crypto app registrations in the UK failing anti-money laundering (AML) checks, the need for a more cohesive and collaborative approach is evident [1]. The nature of crypto fraud continues to evolve, spanning from traditional schemes like Ponzi and pump-and-dump operations to more sophisticated tactics such as address poisoning. These fraudulent activities not only threaten investor confidence but also pose significant challenges to the industry’s long-term viability [2].

The industry is increasingly recognizing that isolated compliance measures—such as scam alerts and disruption tools—are insufficient in the face of rapidly evolving threats. A unified strategy that leverages cross-sector data sharing is essential for identifying and blocking illicit activity. In traditional finance, such collaboration is already a norm, with countries like Singapore mandating anti-scam data exchanges and voluntary initiatives operating in Australia and the UK. These models have demonstrated their effectiveness in curbing global fraud [3].

The digital asset industry is now seen as a critical missing link in these broader anti-fraud networks. By integrating into existing data-sharing frameworks, crypto platforms can contribute to a more comprehensive defense mechanism that benefits both traditional and digital finance. Mike Haley, CEO of Cifas, argues that this integration is not just a regulatory requirement but a strategic imperative for the sector. It allows for real-time monitoring of suspicious activity, particularly at on- and off-ramps where illicit proceeds are often moved between digital and fiat currencies [4].

The UK, in particular, is positioned as a leader in advancing this agenda. Recent regulatory clarifications, such as the Information Commissioner’s Office’s guidance that data protection should not hinder fraud prevention efforts, have created a favorable legal environment for cross-sector collaboration. Additionally, the Data (Use and Access) Act 2025 reinforces the legitimacy of such initiatives by recognizing crime prevention as a valid interest under data laws [5]. These developments align with the Financial Conduct Authority’s emphasis on data sharing as a key tool in combating money laundering linked to fraud [6].

Despite these advancements, challenges remain. The absence of a globally standardized data-sharing framework means that individual platforms are often left to manage compliance independently, which can lead to inefficiencies and gaps in coverage. Analysts warn that without a unified approach, the burden of compliance will increasingly fall on the most technologically advanced or well-resourced firms, potentially creating an uneven playing field [7]. This could discourage smaller players from entering the market and limit the diversity and innovation that are central to the crypto industry’s growth.

In response, there are growing calls for the development of blockchain-based solutions that can enhance transparency and traceability in cross-border transactions. Such innovations could help bridge the gap between regulatory requirements and the unique characteristics of digital assets. The industry must also continue to leverage the expertise of experienced fraud prevention professionals to stay ahead of emerging threats and refine compliance strategies [8].

Ultimately, the push for data sharing is not just about regulatory compliance—it is about building trust. A robust, transparent compliance infrastructure will be essential in attracting institutional investors, maintaining public confidence, and ensuring the long-term sustainability of the crypto sector. As global regulatory frameworks continue to evolve, the ability of the industry to adapt and collaborate will play a defining role in its future. The path forward will require a delicate balance between transparency and privacy, coordination and autonomy, and innovation and regulation.

Source:

[1] Data Sharing Is The Next Crypto Compliance Frontier (https://cointelegraph.com/news/data-sharing-compliance-frontier)

[2] Data Sharing Gains Urgency in Crypto Crime Fight (https://www.ainvest.com/news/data-sharing-gains-urgency-crypto-crime-fight-2508/)

[3] Data sharing is the next crypto compliance frontier (https://www.todayonchain.com/news/article/01K22HPSE90ETCRBNE0H973GFD/)

[4] Data Sharing Is the Next Crypto Compliance Frontier (https://coinmarketcap.com/community/articles/689553109652526dbe5c2714/)

[7] According to the analyst's forecast