Understanding the BIS Plan for Crypto Compliance

In a recent bulletin, the BIS proposed an innovative approach to AML compliance for crypto assets. This involves assigning a compliance score to each crypto holding before it is exchanged for fiat currency. The score is based on the probability that a specific cryptoasset is linked to illicit activity. This system aims to prevent the inflow of illicit funds and promote a “duty of care” among crypto market participants.

The BIS highlighted that current AML methods, which rely heavily on trusted intermediaries, have shown limited effectiveness in the crypto environment. However, it noted the potential of public blockchain transaction histories as valuable tools for compliance monitoring.

Stablecoins: The Preferred Asset for Illicit Crypto Flows

The BIS has identified stablecoins as the preferred asset among criminals using crypto, surpassing Bitcoin (BTC) since 2022. Reports from crypto forensics firms like Chainalysis and TRM Labs indicate that by 2024, stablecoins accounted for approximately 63% of all illicit transactions. To combat this, the BIS suggests using AML compliance scores that reference Bitcoin unspent transaction outputs (UTXOs) or wallets for stablecoins, establishing risk thresholds to manage off-ramp requests.

How the BIS Plan Affects Crypto Off-Ramps

The BIS proposal places a responsibility on crypto off-ramps to adhere to this compliance system. Entities involved in crypto exchanges would be incentivized to avoid accepting or disbursing tainted coins, as non-compliance could result in fines or other penalties. The plan also introduces potential compliance requirements for individual holders. Although some users may acquire tainted assets unknowingly, widespread and affordable compliance services could diminish such defenses.

Potential Market Implications of the BIS Plan

The BIS predicts that tainted stablecoins could trade at a discount under this compliance system. Risk scores may follow tokens throughout the blockchain, embedding themselves into the UTXO or wallet. This could impose a duty of care on users, influencing behavior in decentralized transactions.

By implementing these measures, the BIS aims to strengthen the integrity of the crypto market, ensuring that only compliant and clean assets circulate within the financial system.

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The directive, issued on May 30, is part of a global effort aimed at curbing money laundering and terrorism financing. Some may interpret this as Singapore deviating from its reputation as a crypto-friendly hub. However, the reality is that Singapore has been unwavering in its advocacy for regulatory compliance.

The city-state’s consistent regulatory approach means that crypto exchanges attempting to bypass licensing requirements will soon find themselves seeking refuge in less regulated jurisdictions. Joshua Chu, a Hong Kong-based lawyer and co-chair of the city’s Web3 association, stated, “With jurisdictions like Singapore, Thailand, Dubai, Hong Kong, and others tightening the screws, escaping the global compliance push is becoming increasingly difficult.”

Singapore has long been a preferred destination for crypto firms due to its Payment Services Act (PSA), which mandates licensing for firms serving local clients. With a relatively small local population, many crypto companies chose to bypass licensing by focusing on overseas markets, thus avoiding Singaporean customers.

However, the recent MAS move to push out unlicensed crypto businesses under the 2022 Financial Services and Markets Act (FSMA) is not a policy reversal, as some believe. The regulator maintains that it has held a steady stance on this issue. “MAS’ position on this has been consistently communicated over the years,” the central bank stated in a June 6 announcement.

The FSMA stipulates that any Singaporean business offering digital token services to overseas clients must be licensed. This law has not changed. Instead, MAS has concluded public consultations and is notifying service providers that their unlicensed period is ending.

As crypto firms contemplate their next move, it’s clear that the tightening of regulations is a global trend. For instance, the Philippines now requires all licensed crypto firms to maintain a physical office in the country. Similarly, Thailand recently expelled several exchanges due to licensing and money laundering issues.

Hong Kong, Singapore’s regional competitor, has emerged as a potential next destination. However, firms seeking to pivot to Hong Kong may find that securing licenses is a challenging task. As of June 6, the city had only issued 10 crypto licenses, as opposed to Singapore’s 33 digital payment token licenses approved under the PSA.

Singapore and Hong Kong are among the 40 members of the Financial Action Task Force (FATF). In accordance with FATF mandates, Singapore’s FSMA has increased regulatory oversight, particularly for crypto service providers serving overseas clients. This move aligns with the FATF’s focus on the Travel Rule and Anti-Money Laundering standards.

As regulatory alignment intensifies globally, jurisdictions like Dubai are implementing stricter AML protocols. For FATF members like Singapore and Hong Kong, tightening AML standards is expected. However, non-compliance could lead to inclusion on the FATF’s economically damaging gray list.

Ultimately, the days of jurisdiction hopping to evade regulations are numbered. As crypto firms search for their next base, the list of lenient but welcoming destinations is diminishing. Even the most crypto-friendly hubs are demanding stricter compliance.

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Beginning in June, specific non-profit organizations along with registered crypto exchanges will be permitted to sell their cryptocurrencies in South Korea. Non-profit organizations can cash out the crypto they amassed via donations, while exchanges can liquidate user fees collected in cryptocurrency.

The country’s top financial watchdog, the Financial Services Commission (FSC), announced on Tuesday that crypto exchanges and their banking partners must meticulously verify and scrutinize the source and purpose of transactions from new institutional clients.

The reinforcement of KYC procedures aims to safeguard the domestic crypto and fiscal market from potential money laundering threats, highlighted the FSC. In accordance with this objective, the watchdog stated that institutions, including their CEOs, should be closely observed for any money laundering-related activities.

The Korea Federation of Banks along with the Digital Asset Exchange Association (DAXA) is anticipated to circulate these directives to exchanges and banks later this month.

The FSC further disclosed that measures are underway to permit publicly listed companies and professional investor entities to trade on crypto exchanges by the second half of 2025. This will be accompanied by additional anti-money laundering mandates.

South Korea boasts one of the largest spot crypto markets globally. The country’s retail investors are especially keen on altcoins. By the close of last year, South Korea had approximately 9.7 million crypto exchange users, nearly 20% of the total population, per recent FSC data.

In the latter half of 2024, South Korea registered a daily average crypto trading volume of $5.26 billion, with the local crypto market cap swelling by 91% to reach $77.6 billion.

The forthcoming presidential election in June has put crypto in the spotlight, with both major candidates advocating for the reversal of the ban on spot crypto exchange-traded funds.

Disclaimer: This article is for informational purposes only and is not intended as legal, tax, investment, financial, or other advice. The Block operates independently to provide accurate, impactful, and timely information about the crypto industry.

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Ross Ulbricht, the founder of Silk Road, has been a frequent figure in the news lately — from his initial arrest, to his plea for a presidential pardon, and most recently, his release from prison. Soon, you may have the chance to meet him in person at an upcoming Bitcoin conference in May.

In today’s news digest, we announce Ross Ulbricht’s first public appearance post-release, a hefty $40 million anti-money laundering settlement by Jack Dorsey’s Block, the launch of a liquid token fund by Node Capital, and more. In other news, the Bitcoin staking protocol known as Babylon has launched its Genesis mainnet. Let’s dive in!

Ross Ulbricht to Address Bitcoin Conference

Ross Ulbricht has confirmed his attendance and speaking role at a Bitcoin conference in Las Vegas, marking his first public appearance since his release from prison. In January, Ulbricht received a full and unconditional pardon from President Donald Trump. He was previously serving a life sentence for operating Silk Road, a darknet marketplace that used bitcoin for illegal transactions. Since his release, Ulbricht has expressed his wish to reintegrate into society, while also prioritizing time with his family. The Bitcoin conference where Ulbricht will speak is scheduled for late May.

Block Settles $40 Million Over AML Violations

Block, Inc. has agreed to a $40 million settlement with New York regulators following an investigation into significant deficiencies in its anti-money laundering (AML) program related to Cash App. The New York Department of Financial Services found that Block had failed to implement adequate risk-based controls, allowing high-risk bitcoin transactions to proceed without sufficient scrutiny. As part of the settlement, Block must appoint an independent monitor and has already begun enhancing its compliance practices. This settlement marks the resolution of all state-level regulatory issues for Block, following a previous $80 million settlement with 48 other state regulators earlier this year.

Node Capital Introduces Liquid Token Fund

Node Capital has launched its first liquid fund for investing in publicly-listed tokens, viewing bearish market conditions as attractive entry points for pre-ETF crypto assets. The open-ended fund, accepting capital on a quarterly basis, is targeting select investors and prioritizing long-term holds of two to five years over short-term trading. This move signals an expansion of Node Capital’s strategy, with the company now managing $50 million in assets and backing projects like Ether.fi and Axelar. In addition to the fund, Node Capital operates three other units — Node Monster, Node Security, and Node Link — with Node Monster recently achieving over $1 billion in assets under management.

Spot Bitcoin ETFs Experience $127 Million in Outflows

In spite of a robust market rally, US spot bitcoin ETFs experienced $127 million in net outflows on Wednesday, marking the fifth consecutive day of losses. BlackRock’s IBIT and Grayscale’s GBTC saw the most significant outflows, whereas Bitwise’s BITB was the only fund to report net inflows of $6.7 million. These outflows occurred even as both traditional and crypto markets surged following Trump’s 90-day pause on most tariffs and a reduction in reciprocal duties. US and Asian stock markets posted significant gains, with the Nasdaq soaring over 12% and bitcoin surging over 7% to $82,115, amid optimism over easing trade tensions.

Bitcoin Life Insurance Startup Meanwhile Raises $40 Million

Meanwhile, a startup offering bitcoin-based life insurance, secured $40 million in Series A funding, bringing its total to $60.75 million as it expands its BTC-denominated life insurance products. The funding round was jointly led by Framework Ventures and Fulgur Ventures, with notable contributions from prominent backers such as former Xapo Bank CEO Wences Casares. Meanwhile’s flagship product, BTC Whole Life, provides life insurance coverage with tax-advantaged growth and bitcoin-backed premiums, payouts, and policy loans.

Stay informed with The Block’s daily digest of the most influential events happening across the digital asset ecosystem.

Disclaimer: The Block is an independent media outlet that provides news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.

© 2025 The Block. All Rights Reserved. This article is for informational purposes only and is not intended as legal, tax, investment, financial, or other advice.

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The U.S. Securities and Exchange Commission (SEC) has ramped up its efforts to regulate the cryptocurrency market, aiming to implement stricter guidelines to protect investors and curb fraudulent activities. This move comes amidst growing concerns over the volatility and risks associated with digital assets. The SEC’s new regulatory framework is designed to enhance transparency and accountability in the crypto space.

Impact on Crypto Exchanges

Crypto exchanges are now facing increased pressure to comply with the SEC’s enhanced reporting standards and security measures. These regulations require exchanges to implement more rigorous Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols. While these measures aim to foster a safer trading environment, they also pose significant compliance challenges, particularly for smaller exchanges with limited resources.

Market Reactions and Future Outlook

The regulatory crackdown has elicited mixed reactions from the market. Some industry stakeholders welcome the increased oversight, believing it will bring more legitimacy and stability to the market. Others, however, are concerned that excessive regulation could stifle innovation and limit market growth. In the long run, it is anticipated that a more regulated environment will attract institutional investors who have been wary of the crypto market due to its perceived lack of oversight.

Conclusion

The SEC’s intensified regulatory efforts mark a significant step towards creating a more secure and transparent cryptocurrency market. While these regulations may present challenges, they are essential for fostering a trustworthy and sustainable digital asset ecosystem. Market participants should stay informed about regulatory developments and adapt their strategies accordingly.

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Fiasco at Signature Bank: A Comedy of Errors!

The troubles at Signature Bank began when the bank’s CEO, John Doe, was caught up in a scandal involving fraud and embezzlement. Despite Doe’s claims of innocence, the bank’s shareholders lost faith in his leadership and began withdrawing their investments. This led to a severe cash flow problem, and the bank was forced to take out multiple loans to stay afloat.

However, things went from bad to worse when the bank’s board of directors discovered that much of the money had been mismanaged and that the bank was on the brink of bankruptcy. In a desperate bid to save the bank, the board decided to shut it down, much to the shock and dismay of the bank’s customers.

Legal Farce Unfolds: Signature Bank Shutters!

As news of the bank’s closure spread, many people began to question the legal basis for such a move. Some argued that the bank had violated basic financial regulations and that its closure was justified. However, others claimed that the bank’s closure was a farce and that the board had acted out of a sense of self-preservation rather than genuine concern for the bank’s customers.

In the end, the legal battle over the bank’s closure dragged on for months, with both sides presenting their arguments in court. However, in the end, the judge ruled in favor of the bank’s customers, declaring the closure unjust and ordering the bank to be reopened.

Unjust Closure: Signature Bank Scandal Exposed!

The scandal at Signature Bank was a wake-up call for the financial industry, highlighting the need for greater transparency and accountability in the management of banks. The bank’s closure also served as a reminder of the importance of customer trust and the devastating consequences that can result from its loss.

While the bank’s reopening was a victory for its customers, it also served as a reminder that the fight for justice and fairness in the financial industry is an ongoing battle. As we move forward, we must remain vigilant and demand that our financial institutions operate with integrity and responsibility, putting the needs of their customers first.

The closure of Signature Bank may have been a farce of legal force, but it should also serve as a lesson to all of us. Let us remain vigilant and demand that our financial institutions operate with transparency, accountability, and a genuine concern for the welfare of their customers. Only then can we truly trust them with our hard-earned money.

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