Opinion by: Mike Haley, CEO of Cifas
While the crypto sector transforms finance worldwide, it faces a rising tide of fraud. In 2024, cryptocurrency scams reached an estimated $9.9 billion, with forecasts for 2025 suggesting a further increase.
Criminal schemes range from traditional frauds like Ponzi and pump-and-dump operations to newer crypto-specific tactics such as address poisoning. This widespread fraud damages the industry’s reputation and diminishes consumer trust.
Fraudsters are increasingly exploiting crypto platforms to launder illicit proceeds from traditional finance. This trend challenges businesses striving to keep pace with evolving anti-money laundering (AML) regulations. Alarmingly, nearly 90% of crypto app registrations in the UK fail due to inadequate AML and fraud controls.
Challenges Facing the Crypto Sector
The crypto industry is responding, but isolated efforts like scam alerts and disruption tools have limited impact. A robust, collaborative approach involving comprehensive anti-financial crime data sharing is essential.
Data sharing between sectors is becoming standard in traditional finance, with examples from Singapore’s mandatory anti-scam data exchanges to voluntary schemes in Australia and the UK. These collaborations are proven defenses against surging global fraud.
The digital assets community remains the missing piece in this cross-sector puzzle. Integrating crypto players into existing data-sharing networks can strengthen defenses and benefit the entire industry ecosystem.
From Theory to Practice
Industry stakeholders should focus on three main strategies:
- Recognize that even dedicated crypto fraudsters rely on fiat currency on- and off-ramps, which are critical points to intervene against crypto-linked fraud.
- Build AML defences against laundering of fraud profits through digital assets, requiring seamless data exchange across the value chain to detect and block illicit actors.
- Leverage the expertise of experienced fraud prevention professionals to help mature compliance in the digital assets sector and counter emerging fraud typologies effectively.
Failing to share data impedes these preventative actions, as no actor can see the whole picture alone.
Accelerating Data Collaboration
The UK presents a favorable legal and regulatory environment for pioneering cross-sector data sharing. Recently, the Information Commissioner’s Office clarified that data protection must not be used as a barrier when preventing fraud and scams.
This applies notably to criminal schemes exploiting data breaches and impersonation of authorities. Legislative reforms like the Data (Use and Access) Act 2025 specify crime prevention as a recognized legitimate interest, bolstering the legal case for data sharing.
Regulatory plans suggest digital assets will fall under consumer protection laws similar to traditional finance, inherently requiring cross-industry data sharing to prevent fraud.
Additionally, the Financial Conduct Authority emphasizes data sharing as a vital tool against fraud-related money laundering.
The UK benefits from a mature ecosystem of financial crime data collaborations, including the Joint Money Laundering Intelligence Taskforce, already expanding to include digital assets with government support.
Crypto communities understand the urgent reputational and regulatory risks posed by fraud. However, combating this challenge necessitates unified, cross-industry data sharing efforts to enable effective worldwide fraud prevention. The UK’s advantageous framework positions it to lead this global initiative.
Opinion by: Mike Haley, CEO of Cifas.
This article is for informational purposes only and does not constitute legal or investment advice. The author’s views do not necessarily reflect those of Coinstelegram.
