Solutions for institutions adopting crypto: Security and Compliance

Institutions moving into blockchain and crypto have a number of challenges to overcome. Instead of focussing on these challenges, we’ve instead gathered some of the most relevant solutions to the common hurdles faced. In this blog, we are focussing on security and compliance. 
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Security 

Whether its retail or institutional, security risks are important and potentially damaging issues to keep at the top of the list. Crypto is volatile and has the potential for great highs as well as great lows. However, the world of crypto and the blockchain also provides some of the most innovative solutions for those security issues relevant to the industry. There are two key elements that institutions should keep in mind: user education and security technology. Security technology is self-explanatory to some extent: keeping on top of the latest in safety developments means that clients are kept protected from the most sophisticated of attacks. User education is more difficult to get right and exists on a sliding and subjective scale, but it is no less vital. 
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User education

Any user of crypto needs to be educated to a certain degree to keep themselves safe. The awareness of typical crypto scams, pitfalls, and common security breaches is hugely important to keeping assets safe. Digital assets on the blockchain are constantly growing, and understanding their complexities makes for a safer, more secure ecosystem. It also helps to overcome misconceptions about the industry. We are no longer in the Wild West days of the early 2010s, where crypto - often justifiably - had a reputation as an arena that was dangerous to step into, steeped in crime, and liable to disappear in a heartbeat. Some echoes of those days remain in crypto, of course, but changing the perception of the industry through user education fosters a more informed user base and institutional usage of crypto technologies. 

 
Security technology

Technology to keep crypto safe and secure is constantly evolving. That could be secure wallet practices such as using strong, unique passwords, encryption, and a mix of cold storage as well as hardware and software wallets. It could also mean strict anti-money laundering regulations such as KYC, CDD, or enhanced due diligence. All of these facets are constantly being created, enhanced, and automated as processes for institutions to utilize. This technology makes it easier for institutions’ security to be at its best. 

Compliance

Compliance is being brought to the very forefront of the crypto industry. As the Markets in Crypto Assets (MiCA) regulation comes into force in Europe, everyone looking to step into or remain in crypto in the region must comply with the new regulatory framework. It also has a huge impact on investor and user confidence in institutions that can demonstrate full regulatory compliance. But with frameworks such as these being newly introduced and changing more slowly than the industry is, it can become a challenge for institutions adopting crypto. Here are some of the most relevant solutions to remaining compliant.

Investment 

Investing in robust compliance infrastructure is essential to remain on top of the ever-changing world of regulation. That infrastructure includes compliance teams, technological solutions to automate processes, and being involved in as high a level as possible in regulatory feedback to industry groups.  

Investment is also useful for regular audits, strong privacy and security measures, and integrating Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures. Collecting and storing that data safely requires the investment of both time and money.

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Staying informed

Being compliant is not about being up to date on regulations one day of the year. Being compliant requires a consistent awareness of new challenges and changes, listening to feedback from users and clients, and keeping an ear to the industry. It is one thing to invest money into creating compliance infrastructure, but that infrastructure must be ready to constantly evolve as regulations do. MiCA is just one example of a regulation that has gone through several iterations and yet does not adequately cover the entire crypto industry. Institutions cannot rely on regulators to stay ahead of the game - they will always be playing catch up. Staying up to date with the industry is the best solution to remaining on top of everything compliance-related.