CRYPTOASSET FRAUD: INVESTIGATIONS AND ASSET TRACING
R&C: Could you provide an overview of the growth of cryptocurrencies and cryptoassets in recent years? How would you characterise their evolution and popularity?
Stepanyan: The emergence of cryptoassets represents the next stage of evolution in the broader FinTech and global payments space. This nascent industry is starting to show significant signs of maturity, with platforms implementing security and compliance measures to curb market manipulation and illicit activity. This increased vigilance is largely driven by the desire to accommodate compliance risk requirements for institutional players. These institutions are eager to participate in public blockchain product offerings, which grew to more than $3 trillion by the end of 2021. Industry growth has been driven by several factors, including the rise of cryptocurrencies as speculative investments, the growing adoption of cryptocurrencies by merchants and businesses, and the development of new technologies and applications in the crypto space. We would highlight three key trends. First, increasing institutional adoption. Most recently, we have seen several banks experimenting with public and private blockchain-based products and solutions, including the tokenisation of real-world assets and reimagining of correspondent bank networks. Second, growing mainstream adoption. Consumers are becoming more comfortable with owning, storing and transacting with cryptocurrencies. This is the first step in the manifestation of equitable access to financial services without the barriers of conventional banking. While the adoption is primarily in emerging economies and dominated by the use of stablecoins, greater regulatory clarity, including tax and accounting, and implementation by merchants will drive broader retail adoption. And third, rapid technological innovation. The crypto space is constantly evolving, with new technologies and applications being developed all the time. This includes innovations in blockchain technology, decentralised finance (DeFi), non-fungible tokens (NFTs) and, more recently, tokenisation of real-world assets.
Jan-Mar 2024 Issue
BDO