Roundtable Recap: How to Leverage Blockchains for Good

At the Point Zero Forum in Zurich, TRM Labs hosted a roundtable discussion on "Blockchains for Good: Harnessing Technology to Fight Financial Crime, Protect Consumers, and Foster Financial Inclusion." The roundtable, which took place under Chatham House rules, brought together regulators from key jurisdictions—alongside representatives from global financial institutions and digital asset players—to discuss how the transformative potential of blockchain technology can address some of the most pressing issues in the digital assets sector. 

The discussion was segmented into three key themes: fighting financial crime, protecting consumers, and fostering financial inclusion—each contributing to a broader vision of leveraging blockchains for the public good.

Better together in the fight against financial crime

In the fight against financial crime, community trumps competition. Participants agreed that for the industry to succeed, better compliance outcomes at individual digital asset firms is an essential first step, as it builds credibility with regulators and other stakeholders. 

Building a community of global compliance professionals who are committed to sharing best practices is also key to elevating the industry’s ability to disrupt financial crime. However, there’s always room for a little healthy competition, with one participant quipping: “Where you can be competitive is in the speed at which you respond to illicit finance.” Here, having robust feedback loops within the industry, as well as within the public and private sector, is very important. One industry participant cited established connections with law enforcement agencies around the world, which enabled them to respond to tens of thousands of law enforcement requests in a year. 

The roundtable also touched on the potential for data sharing arrangements, in the vein of COSMIC, launched by the Monetary Authority of Singapore in April 2024 to allow the secure sharing of information on risky customers between banks. The discussion also touched on the work of the Bank for International Settlements’ Project Aurora in leveraging technology to enable information sharing while upholding data privacy and information security. One participant stressed that this would take commitment from every stakeholder, declaring that “data sharing is for the committed, not the curious.”

Finally, in a cost-conscious, commercial reality, participants agreed on the important role of clear regulatory requirements in justifying investments in new frameworks and systems.

Collaborate and educate, with consumers in mind

Next, the roundtable focused on various jurisdictions’ experience in designing and implementing consumer protection requirements for the digital assets industry. Participants discussed the merits of taking practices from traditional finance—for example, around market abuse—and applying them to crypto markets in a way that made sense. One participant also pointed out challenges in supervising these new areas, particularly for regulators with stretched  capacity and expertise. 

Here, the participants again agreed on the importance of collaboration and support, encouraging regulators to lean in and help each other, and for regulators to keep communicating with firms to understand how regulatory requirements can be practically implemented. One participant noted that communication works two ways, and that “ultimately, you get the regulator you ask for.” 

Crucially, both sides must understand what risks they are trying to address, and how different tools are being used in various workflows to mitigate these risks. Especially when a business is approaching a problem differently than its peers, it must put in the work to explain its thinking. Ultimately, effective risk mitigation can only be achieved with candid conversations between the regulators and their regulated population.

And of course, consumers must be at the center of the controls being built. Participants stressed the importance of keeping the consumers in mind when designing and implementing consumer protection controls—noting that this is key to making sure those controls are effective and reasonable. 

Rethinking the system for better inclusion

On the final theme of financial inclusion, the discussion revolved around the impact of technological and generational changes on financial services—with participants emphasizing the need to ensure that financial services remain meaningful and accessible to all. 

One participant pointed out that humanitarian and social impact use cases are already at play in the digital asset space. For example, Circle’s USDC stablecoin has been used by the United Nations and the Stellar Development Foundation to distribute aid to war-affected people in Ukraine. Another participant suggested that a rethink might be in order, leveraging technology and addressing underlying issues that prevent equal access to financial services.

The path forward: Listen, tell, iterate

The roundtable concluded with a call to action: "Listen. Tell. Iterate." 

Regulators and industry leaders must listen to each other to understand what their respective concerns and priorities are. 

Next, regulators must tell industry clearly what the rules and expectations are. The industry in turn must tell the regulators how they implement those rules and expectations, including their limitations and any challenges they face. 

And together, they must iterate on solutions, continually refining and improving regulatory and operational frameworks to harness blockchain technology for the greater good. 

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For more public-private dialogue, be sure to join the TRM team at the Elevandi Insights Forum in Singapore in November.