With businesses and banks now betting on bitcoin, the financial crime risks have never been higher

Individuals and corporates (including MicroStrategies) are diving into the world of Bitcoin. The immediate question is whether Bitcoins extreme volatility remains and, as seen in the past, will end in a dramatic sell-off or if the surge will continue. At this point it is hard to tell and momentum seems irresistible.

However, regulators have been paying attention to cryptocurrency for many years and the US Department of Justice published its enforcement framework late last year. This framework pointed the way in terms of how generally existing approaches would be applied to the new world - recognising the financial crime and sanctions-busting risks in particular.

But there is still some regulatory ambiguity around NFTs (non-fungible tokens), or scarce digital content represented as tokens. They're becoming a larger and more nuanced market than DeFi (decentralized finance) applications, which is the existing technology platform in place behind bitcoin. NFTs allows entities to have access to transaction history and expands the use of blockchain to complex financial use cases beyond simple value transfers.

Consequently, NFTs are driving a new wave of crypto adoption with its advanced usage of the Ethereum open-source blockchain. NFTs are popular in the digital arts industries, content production and gaming. It's also looking like NFTs will see a rise in confusion and contention with respect to taxation and property rights, which will generate disputes.

Take contract enforcement of property rights for example. It's not clear whether there is sufficient precedent for code based contracts to be legally enforceable. The situation differs from country to country. In Spain, contracts need to be written in plain language, which means that smart contracts will not qualify as enforceable. In the US, digitally-signed contracts and the tie to a physical individual's identity could be sufficient, but there may be a need for a separate legal contract along with the digital smart contract.

Clearly there's a lot of change going on right now - and regulatory bodies are doing all they can to keep up.

Janet Yellen, the new US Treasury Secretary, has highlighted the risks associated with what she considers to be a highly speculative asset, putting the public and corporates on notice.

However, Tesla is said to have made up to $1billion from its "speculation, "so corporate treasurers may be tempted to put any spare cash to better use than languishing in low yield deposits and bonds. The longer the boom extends, the more that are likely to be swept up and, should the worst happen, the wider the effects of any crash.

More widely, governmental responses are poles apart. In India and Nigeria moves are in progress to ban cryptocurrency, while in other countries (including, for example, parts of Switzerland) bitcoin is being accepted for local tax payments. UAE will now accept it for visa payments and business licences.

And interestingly, the increased profile of cryptocurrency appears to be influencing the related Central Bank Digital Currencies where China is leading the charge with its e-Yuan.

Not only that, but Goldman Sachs has recently decided to restart its cryptocurrency exchange desk, with others in Wall Street (like JPMorgan) reportedly close to adopting and offering the currency to its clients and employees. Citi has also weighed in with a lengthy and detailed white paper entitled "Bitcoin - At the tipping point". With corporates and international banks betting on bitcoin, the future of cryptocurrency is on our doorstep, and it's important that we know exactly how to calibrate compliance programs to avoid the risk of unfettered financial crime.