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Crypto and Digital Asset Solutions

The virtual asset market, which includes cryptocurrencies, non-fungible tokens (NFTs), stablecoins, decentralized finance, and increasingly the emergence of “Web3,” is in the process of remaking financial activity and human interaction, demonstrating both incredible growth potential as well as incredible risk and volatility. All organizations, whether in the public or private sector, have been or soon will be impacted by the technological, financial, regulatory, and risk changes triggered by this evolving market.

This extreme volatility and rapid development, as well as the exploitation of crypto market participants by financial criminals, have left regulators, lawmakers, and law enforcement racing to keep pace, even as retail participants rush to realize gains in the market. Regulators are working to define these “new payment” types even as governments themselves embark on the design and distribution of Central Bank Digital Currencies (CBDC). Fraudsters and malevolent actors—which include nation-states—have exploited certain aspects of the market for criminal aims, but the core transparency of blockchain transactions has also led to notable successes. “Crypto” is far from fully anonymous.

But while the risks of virtual assets are many, for those firms able to understand the regulatory complexity, meet current and growing enforcement expectations, and deliver new market paradigms while navigating and managing possible perils, no other space in the financial industry offers as much potential to change the world as we know it.

K2 Integrity is uniquely and superbly placed to help financial institutions, governments and regulators, virtual asset service providers (VASPs), “Web3” startups, NFT marketplaces, and other emerging service providers to proactively navigate and manage the risks of virtual assets and their related technologies. Our virtual asset clients include some of the biggest names in the crypto industry—all of which have a broad vision for the market and their place in it. They seek to offer everything a traditional financial institution can, and in some cases go beyond to re-envisioning what value transfer might be in the coming decades. Our experienced multidisciplinary team of experts from government, law enforcement, and the virtual asset industry operate alongside these visionary clients, helping them design and build the framework to realize their visions and ambitions.

These services have included:

Design, creation, validation, and implementation of fit-for-purpose and better-than-fiat financial crime compliance programs, to meet all current regulation and be prepared to meet the inevitable changes, including risk assessments, organization design and review, and policy and procedural development.
Point-in-time and ongoing strategic advisory services, to navigate individual compliance questions and emerging circumstances, or to provide ongoing “virtual chief compliance officer” protections to aid companies in their development.
Design and implementation of the necessary controls to support risk mitigation and digital identity authentication to mitigate potential terrorist financing and economic sanctions risks.
Creation of a financial intelligence function at a blockchain protocol level and an individual institution level to support best-in-class investigation and management of risk.
Assessment and deployment of transaction monitoring and surveillance programs, including both the use of major industry vendors and home-built approaches, to detect potential fraud, money laundering, and other illicit transactions.
The training, testing, and certification of staff in VASPs or in the financial industry more broadly to support effective risk management.
Managed services to support growing operational workflows as control frameworks are implemented.
Regulatory support with registration and licensing approval with various regulatory authorities: U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), New York State Department of Financial Services (DFS) BitLicense, other U.S. state-level entities, the UK Financial Conduct Authority, Dubai Financial Services Authority, etc.
Assisting banks and other traditional financial institutions in understanding, assessing, and managing the risks presented by VASP customers and counterparties.
Investigations and source-of-wealth documentation and other bespoke advisory services to allow safe onboarding of individuals with wealth generated from the cryptosphere or to advise private banking clients, investment funds, or family offices that seek to invest in the virtual assets ecosystem.
Performing national risk assessments of virtual assets and VASPs for jurisdictional authorities, leveraging quantitative and qualitative data and information from supervisors, law enforcement, financial intelligence units, and the private sector to ensure a comprehensive understanding of threats, vulnerabilities, and risks related to virtual assets.
Developing and drafting for jurisdictional clients supervisory guidance, regulation, or law aimed at the private sector on managing risks associated with virtual assets and VASPs.

U.S. authorities are continuing to direct policy, regulatory, and enforcement attention on the financial crime and sanctions risk in the crypto and digital asset ecosystem. Recently, the Treasury Department imposed sanctions and financial crime compliance expectations parallel to requirements of the traditional finance industry.

Crypto and Digital Asset Solutions

These services have included:

New York, London, Washington DC, Geneva, Los Angeles, Chicago, Doha, Miami, Abu Dhabi