New BIS plan could make ‘dirty’ crypto harder to cash out
Main Idea
The Bank for International Settlements (BIS) has proposed a new plan to make it harder to cash out 'dirty' crypto by introducing AML compliance scores for transactions, with stablecoins identified as the main vehicle for illicit crypto flows.
Key Points
1. The BIS proposes an AML compliance score to assess the risk of crypto transactions entering the banking system.
2. Stablecoins have overtaken Bitcoin as the main vehicle for illicit crypto flows, accounting for approximately 63% of all illicit transactions as of 2024.
3. The BIS's AML compliance scores would reference Bitcoin unspent transaction outputs (UTXOs) or wallets in the case of stablecoins.
4. Risk scores could accompany the token as it moves within the permissionless blockchain, embedding the score into the UTXO or wallet.
5. The BIS suggests imposing a duty of care on entities to incentivize compliance and avoid fines or penalties.
Description
The Bank for International Settlements has floated a compliance score for crypto-to-fiat off-ramps, using transaction history to flag and potentially freeze “tainted” assets.
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