When Traditional Finance Adopts Crypto: Updating Risk Assessments and Controls

As regulatory clarity around digital assets improves and enforcement eases – especially in the US – traditional financial institutions may find the time is right to enter the crypto market. However, to maintain their positions as trusted institutions, the most successful institutions will be updating legacy risk frameworks to capture the distinctive risks and challenges inherent to cryptocurrency products and services.

In this article, featured in the Journal of Financial Compliance, FRA experts examine how financial institutions can adapt their risk and compliance functions to leverage opportunities in the crypto space while mitigating threats to their overall regulatory obligations and financial crime exposure. Beginning with a brief overview of recent regulatory developments that are encouraging greater institutional participation, the article then outlines how crypto introduces new and evolving risks that require specialist attention. The article concludes with practical guidance on embedding crypto into enterprise-wide risk assessments. Institutions that wish to innovate responsibly must ensure these controls are designed to meet regulatory expectations while maintaining trust with clients and stakeholders.

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