Core Insights - The "2025 Crypto Payment Compliance Handbook" provides a comprehensive overview of the global regulatory landscape for crypto payments, emphasizing the need for tailored compliance strategies due to the nuanced and differentiated execution of regulations across regions [1][2]. Regulatory Background - The handbook outlines the evolution of global crypto payment regulations, highlighting the shift from principle-based guidance to detailed, region-specific execution [14]. - The Financial Action Task Force (FATF) serves as the primary standard setter for anti-money laundering (AML) and counter-terrorism financing (CFT), influencing the regulatory frameworks of various countries [15][16]. - Different regions have unique regulatory characteristics, such as Hong Kong's Stablecoin Ordinance, the U.S. Bank Secrecy Act, the EU's MiCA framework, and the UAE's capital requirements for compliance [19][24][29][33]. Types of On-Chain Illicit Funds - The handbook categorizes various types of on-chain illicit funds, including terrorism financing, child exploitation, hacking, phishing, dark web transactions, and ransomware, providing a basis for risk identification [38]. Consequences of Receiving Illicit Funds - The legal repercussions for entities involved in receiving illicit funds can include asset freezing, fines, and criminal imprisonment, as seen in cases involving companies like Wise and QIWI [2]. Strategies for Payment Companies - Payment companies are advised to implement risk identification and mitigation strategies using tools like Know Your Customer (KYC) and Know Your Transaction (KYT), along with on-chain intelligence and behavior analysis [2][4]. - The handbook presents case studies from companies like Interlace and KUN, showcasing different compliance solutions tailored to their business models [2][4]. BlockSec's Role - BlockSec is introduced as a one-stop blockchain security service provider, offering real-time compliance monitoring and risk management solutions through its Phalcon Compliance platform [2][5]. Licensing Framework - The handbook details the licensing requirements for crypto payment services across major regions, including Europe, Asia, the Americas, and Africa, providing guidance for global compliance strategies [2][10].

Was Tether too eager to comply with law enforcement requests? Credit: Rosemary Ketchum. Key Takeaways A recent lawsuit has accused Tether of unfairly freezing USDT wallets. According to Riverstone Consultancy, Tether froze $45 million at the request of a local Bulgarian police department. The case could shape how stablecoin issuers process law enforcement requests. Earlier this year, Tether CEO Paolo Ardoino boasted that no other company “has such a breadth of collaboration with law enforcement.” ...

Core Points - The article discusses the requirements imposed by Nasdaq on foreign shareholders, focusing on transparency, compliance, lock-up periods, and information disclosure to ensure trust in the shareholder structure and adherence to U.S. securities regulations [2][3] Group 1: Definition and Classification of Foreign Shareholders - Nasdaq defines "foreign shareholders" as shareholders who are non-U.S. residents or non-U.S. registered entities, including foreign individual investors, institutional investors (such as sovereign wealth funds, pension funds, hedge funds, commercial banks), foreign governments or their agencies, and offshore registered companies [4] Group 2: Key Requirements - **Equity Structure and Information Disclosure**: Companies must fully disclose information about foreign shareholders to ensure investors understand the equity distribution and potential conflicts of interest [2] - **Lock-up Period**: Major shareholders, including foreign shareholders, must adhere to a 6-month lock-up period post-IPO, which may extend to 12 months in certain cases, to stabilize stock prices and prevent market volatility from large sell-offs [2] - **Compliance**: Foreign shareholders must comply with anti-money laundering (AML) regulations and foreign exchange controls when opening accounts through U.S. brokers or depositary banks [3] Group 3: Disclosure Requirements - Major shareholders must disclose their identities and shareholdings in the S-1 filing and annual reports (10-K), including the top ten shareholders and any foreign shareholders holding 5% or more of the company’s shares [4] - Special disclosures are required for foreign government or sovereign wealth fund shareholders regarding their political connections and investment intentions [4] - If foreign shareholders engage in related-party transactions, these must be disclosed in the 10-K, detailing transaction amounts, terms, necessity, and financial impact [4] Group 4: Voting Rights and Taxation - Foreign shareholders can exercise voting rights through U.S. depositary banks (ADR depositary) or directly via brokers, with tax implications on dividends subject to U.S. withholding tax based on tax treaties [5] Group 5: Control Changes and ADR Holders - If a foreign controlling shareholder sells a significant number of shares leading to a change in control, Nasdaq's rules on control changes must be followed, including notifying Nasdaq and disclosing the reasons for the change [5] - For companies listed via American Depositary Receipts (ADR), specific requirements apply to the disclosure of ADR structures and major ADR holders [5] Group 6: Summary of Core Requirements - Nasdaq's core requirements for foreign shareholders emphasize transparency, compliance, and stability, necessitating that foreign shareholders understand U.S. capital market rules and cooperate with companies and intermediaries to ensure a smooth IPO process and protect their interests [5]

Core Viewpoint - Effective and efficient Customer Due Diligence (CDD) is an essential component of risk management strategies, helping organizations understand customer identities and clarify business partners [1][2]. Summary by Sections What is Customer Due Diligence (CDD) and Its Importance - CDD involves verifying customer data to understand potential risks associated with new or existing clients, significantly reducing the risk of fraud and financial crimes [2]. - Effective CDD should be rigorous and in-depth, going beyond basic checks to create a comprehensive profile of each customer while ensuring a seamless service experience [2]. Common Challenges - Organizations face several common challenges in implementing CDD processes, including: - **Data Challenges**: Incomplete or distorted customer information can hinder thorough CDD [4]. - **Technical Shortcomings**: Manual processes are time-consuming and prone to errors, making timely CDD completion difficult without appropriate technological support [5]. - **Resource Limitations**: Budget and human resource constraints put pressure on compliance teams to efficiently conduct CDD [6]. - **Complex Regulatory Environment**: Keeping up with evolving regulatory requirements adds complexity to CDD processes [7]. Customer Due Diligence Checklist - A checklist is provided to help build an accurate and efficient CDD framework, covering key elements such as: - **Screening**: Identifying potential financial crime threats and ensuring compliance with global regulations [8]. - **Enhanced Due Diligence (EDD)**: Necessary when risks are detected, providing critical information about high-risk business relationships [9]. - **Identity Verification**: Essential for reducing fraud risk and establishing brand trust by verifying the true identity of clients [10]. - **Ongoing Monitoring**: CDD is a continuous process, requiring regular reports to identify suspicious activities and adapt to changing risks [11].

Core Viewpoint - The Federal Reserve's decision to revoke the 2022 regulatory guidance on banks' cryptocurrency and dollar token operations marks the end of the Biden administration's stringent regulatory policies, signaling a turning point for the U.S. cryptocurrency market towards relaxed banking services [1][6]. Group 1: Regulatory Changes - The "Choke Point 2.0" initiative began in 2022, requiring banks to report before engaging in cryptocurrency operations, effectively raising the industry's entry barriers [3]. - In 2023, major regulatory bodies further tightened controls by defining decentralized network assets as "inconsistent with banking safety standards" and introducing a "no objection" licensing process, granting regulators veto power [3]. - The tightening of policies was triggered by the systemic risk concerns following the collapse of the FTX exchange in 2022, leading regulators to attempt to isolate the cryptocurrency market by cutting off banks' funding channels [3]. Group 2: Impact of Policy Reversal - With the anticipated return of Trump in 2025, there has been a significant shift in cryptocurrency regulation, including new rules from the OCC allowing national banks to provide cryptocurrency custody and stablecoin reserve management without prior approval [5]. - The Federal Reserve's recent announcement to eliminate the reporting requirements for banks engaging in cryptocurrency business signifies the end of a three-year period of high-pressure regulation, reducing compliance barriers and legal risks [6]. - The policy shift is expected to enable banks to resume cryptocurrency services, improving fiat liquidity and accelerating the use of stablecoins in cross-border payments and DeFi applications [6][8]. Group 3: Future Outlook - The recent regulatory relaxations, combined with favorable actions from the Trump administration, such as SEC approval of altcoin ETFs and the appointment of pro-crypto officials, may lead to significant traditional capital inflows into the cryptocurrency market [8]. - Analysts predict that improved liquidity and regulatory transparency could drive Bitcoin to surpass historical highs, entering a "compliance development 2.0 phase" [8]. - Despite the positive signals from policy relaxations, the industry will still face challenges related to anti-money laundering (AML) and consumer protection, with future regulations likely focusing on "risk-based management" rather than blanket restrictions [8].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The dynamic nature of financial crime remains a significant issue for financial institutions in the Asia-Pacific (APAC) region, driven by innovative methods employed by criminals and increasing regulatory demands [3] - Financial institutions must ensure the effectiveness of their anti-money laundering (AML) programs while balancing customer experience, effectiveness, and efficiency [4] - The evolution of global regulatory frameworks will continue in 2025, driven by the need for financial institutions to have a deeper understanding of their clients and to adopt advanced automated financial crime risk management technologies [5] Regulatory Focus - Strengthening beneficial ownership transparency is a key focus for regulators, especially in Southeast Asia, following high-profile money laundering scandals [6] - There is an increasing emphasis on risk-based approaches, requiring financial institutions to adopt effective risk management strategies tailored to specific risks [6] - The application of advanced automated financial crime risk management technologies, including AI, must meet regulatory expectations and ethical standards [7] Emerging Financial Crime Methods - By 2025, new financial crime methods are expected to emerge, highlighting the need for financial institutions to update and strengthen their risk management procedures [8] - Criminals are increasingly using synthetic identity fraud, combining real and fake information to create new identities, necessitating effective control measures from financial institutions [9] - Online gaming platforms are being exploited for money laundering due to the ease of converting in-game currency to real money, requiring financial institutions to reassess their risk management strategies [10] - Digital assets and cryptocurrencies are becoming a regulatory focus, with institutions needing to understand the regulatory landscape and implement anti-money laundering checks [11] Geopolitical Influences - Geopolitical tensions surrounding Russia, China, and the Middle East will continue to impact compliance in the APAC region, complicating international sanctions regimes [13] Embracing Technology - Financial institutions need to evolve their anti-financial crime (AFC) operations by leveraging artificial intelligence and technology to enhance compliance and risk management [14] - A balanced approach between automation and human expertise is essential for effective risk management, with a clear strategy for AI implementation being crucial [15] - AFC executives should prioritize strengthening their technology, processes, and operational models to improve compliance and risk management [17]