INSIGHT

Crypto compliance and risk management strategies 

Sharon Cassell, Daniel Figueredo • June 4, 2025

Industries: Blockchain & Digital Assets

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Cryptocurrency businesses face increasingly complex compliance and risk management challenges. As blockchain technology transforms how companies conduct business globally, the need for robust compliance frameworks has never been more critical. 

As regulatory scrutiny intensifies across jurisdictions, organizations dealing with digital assets must develop comprehensive strategies to navigate compliance requirements while managing unique operational risks. The complexity of these challenges requires a thoughtful, proactive approach that combines technological solutions with sound governance practices. 

Understanding the crypto compliance landscape in 2025 

The cryptocurrency regulatory framework moves at different rates across global jurisdictions. For U.S.-based crypto businesses, compliance demands have grown significantly with the finalization of Section 6045 regulations in late 2024, which impact reporting requirements for digital asset transactions. In addition, given the current administration’s support of the crypto industry, we can expect greater focus on compliance for US based companies in the coming years.  

DeFi brokers, often referred to as “trading front-end service providers,” were included in these regulations, requiring them to file information returns and report gross proceeds from digital asset sales or exchanges. However, the regulatory landscape remains dynamic, with potential changes under the current administration that could alter reporting burdens for exchanges and wallet providers. 

Crypto businesses must also navigate anti-money laundering (AML) and know-your-customer (KYC) requirements while addressing accounting and valuation issues unique to digital assets, such as impairment testing, fair market value determination, and revenue recognition. These challenges create a compliance environment that demands specialized knowledge and careful attention to regulatory developments. 

Developing risk management frameworks for crypto operations 

Effective risk management for cryptocurrency operations begins with identifying and categorizing the specific risks facing your organization. Digital asset businesses should develop frameworks that address: 

1. Operational risks: Including wallet security, private key management, and transaction validation protocols 

2. Financial risks: Covering asset valuation, volatility management, and liquidity considerations 

3. Compliance risks: Encompassing regulatory reporting, tax obligations, and cross-border requirements including AML and KYC verification and monitoring 

4. Reputational risks: Addressing potential public perception issues and industry relations 

When implementing risk frameworks, organizations should focus on preventing significant vulnerabilities such as fraud through inadequate segregation of duties, financial reporting inaccuracies, regulatory compliance failures, and inadequate asset safeguarding against security breaches. Each category requires tailored mitigation strategies that reflect your organization’s specific activities and risk tolerance. 

Implementing robust internal controls for digital assets 

Strong internal controls form the cornerstone of effective crypto risk management. When establishing controls for digital asset transactions, organizations should implement several critical elements that address the unique challenges of blockchain operations. Key control components include: 

1. Segregation of duties: Distribute responsibilities for initiating, approving, and recording crypto transactions among different team members to prevent any single person from having excessive authority 

2. Access control protocols: Implement strict controls for wallets, private keys, and transaction systems, using multi-signature requirements for high-value transactions 

3. Transaction validation and verification: Create procedures for validating transactions before execution, including checking recipient addresses and confirming transaction amounts 

4. AML and KYC verification: Develop customer eligibility criteria policies with procedures to validate during onboarding and throughout the business relationship 

5. Documentation and evidence collection: Maintain comprehensive records of all crypto transactions and control activities 

Technology solutions can significantly enhance control effectiveness. Consider implementing automated monitoring tools that track blockchain activity across chains, exchanges, and custodians in real-time. Control dashboards can centralize your framework, highlighting controls that require testing while ensuring proper segregation of duties. Testing and evidence management systems create comprehensive audit trails that demonstrate your control environment’s effectiveness to auditors and regulators. 

Navigating tax compliance for crypto businesses 

Tax compliance is one of the most challenging aspects of crypto risk management due to evolving regulations and the complexity of digital asset operations. Organizations must stay current on several key considerations: 

• For crypto funds operating in asset management, clarity continues to emerge around the applicability of specific Internal Revenue Code sections to digital assets. Investment managers should understand provisions like IRC § 475 mark-to-market election, which provides the benefit of characterizing market-to-market downswings as ordinary losses rather than limited capital losses. 
• Digital asset lending, tokenized real estate, and DeFi operations create additional tax complexities. Lending arrangements executed on smart contract-based platforms, for instance, raise questions about whether IRC § 1058 securities lending rules could apply when a transferor of a digital asset receives an identical digital asset and only recognizes yield on the transaction. 
• For businesses involved in tokenized real estate, understanding the tax implications of fractional ownership is crucial. These arrangements may involve considerations around IRC § 1031 tax deferrals and IRC § 704(c) built-in gain provisions that impact how gains and losses are allocated and recognized. 

Future-proofing your crypto compliance program 

In an industry as dynamic as cryptocurrency, building adaptable compliance systems is essential. Future-proofing your program requires the ability to adapt to changing market conditions, advocate for responsible growth, and establish trust with stakeholders. Whether navigating tax implications, exploring tokenized assets, or engaging with DeFi platforms, informed decision-making is key to unlocking the full potential of digital assets while managing risks effectively. 

Organizations should monitor emerging regulatory trends, including: 

1. Expanded reporting requirements: As governments seek greater visibility into cryptocurrency transactions 

2. Cross-border compliance frameworks: With increasing coordination between jurisdictions 

3. DeFi-specific regulations: As decentralized finance continues to grow in importance 

4. Private and public company reporting regulations: Increased requirements for greater transparency for investor communities that includes attestation and control standards 

5. Tokenized asset classification: Including the treatment of fractionalized real-world assets 

A regulatory monitoring function that tracks these developments can help organizations anticipate and prepare for compliance changes before they impact operations. 

Taking proactive steps toward crypto compliance excellence 

Developing effective compliance and risk management strategies for cryptocurrency operations requires specialized knowledge and a commitment to ongoing improvement. Working with advisors who understand both blockchain technology and financial controls provides a significant advantage in this complex landscape. 

For organizations seeking to enhance their crypto compliance frameworks, partnering with experienced professionals can help design, implement, and test the internal controls necessary for digital asset transactions. The right advisors bring both technological understanding and regulatory knowledge to help your organization thrive in this evolving financial landscape. 

BPM is an early mover in blockchain technology, offering comprehensive services for businesses at all stages—from startups preparing for strategic events to mature companies expanding into new markets. By combining knowledge in digital assets with deep knowledge of compliance requirements in state jurisdictions and public company standards, BPM helps organizations navigate the complex challenges of cryptocurrency operations while building frameworks that support sustainable growth. 

Looking to strengthen your cryptocurrency compliance and risk management framework? Contact BPM to explore personalized solutions for your digital asset operations.