560 million cryptocurrency owners worldwide.
These figures show that crypto adoption is surging ahead. And that adoption is creating new wealth.
88,000 crypto millionaires globally. With the recent move in prices, that figure is now probably higher, with one estimate suggesting that crypto wealth among individuals in the US exceeds $100 billion.
71 percent of high-net worth individuals had invested in digital assets.
Moreover, that wealth is generated by people who were not previously rich. And the way it occurs is often fast and unique. Its not steady wealth accumulation; sometimes its quite literally overnight success.
Which all leads to the same question: how can they assess the provenance and legitimacy of that crypto wealth?
Wielded sensibly, the blockchain will show the wealth story - from first investment to cashing out – and provide a structure to rigorously assess financial crime risk. But there are two caveats here:
2. The bank needs to have the right tools and expertise in place to analyse that data
onboarding checklist. Its something we will continue to talk about a lot more in the future, particularly in the context of privacy.
The de-banking threat to crypto investors**
In many ways, it was a classic crypto wealth story: rapid and innovative, using new techniques. But to a non-crypto person, the story might seem outlandish, too fast, complicated and fraught with risk.
So what did the bank know? Or suspect they knew?
Because these are data-driven SaaS platforms, there won't be any immediate context or insight on whether indirect red flags are relevant to your customer.
False positives in the context of AML checks remain a real danger for crypto investors. Tech alone will not solve the wealth analysis issue (yet).
But for those that don’t, it can be extremely difficult to navigate, particularly for those long-term holders. They may not retain documentation on historic purchases, or obtain a trading statement from a defunct exchange. They may not have a record of all of their wallet addresses.
**All this leads to another question: are blockchain analytics platforms inadvertently driving customer de-banking?
The blockchain is an incredibly powerful compliance tool. But it needs to be wielded with care. Because its possible to see so much, red flags are seemingly everywhere. And without sufficient context it may appear that your client has engaged in illicit activity, without them having done anything of the sort.
Because of this, banks are missing out on a multi-billion dollar opportunity to solve the crypto onboarding pain point.