Digital Assets in 2024: Top Risks and Risk Management Strategies for Financial Services


  • Momentum is growing with new players and traditional FIs integrating digital assets into offerings like tokenised treasuries and DeFi-enabled markets.
  • Stricter oversight is emerging due to high-profile incidents, prompting regulators to solidify rules for compliant growth and DLT applications.
  • FIs must review strategies, models, and infrastructures when integrating digital assets, ensuring compliance with evolving regulations.
  • Synpulse provides end-to-end support, including regulatory mapping, risk templates, control assessments, and frameworks, aiding FIs in managing digital asset risks effectively.

Despite the turbulence that disrupted the industry and market prices in the past year, digital assets have established themselves as a transformative element within the financial services since their rapid proliferation in the late 2010s. This new asset class has displayed resilience and potential to further innovate the financial market in 2024.

Digital assets are gaining momentum across different sectors, with a notable presence in financial services. New market players and traditional financial institutions (FIs) are integrating them into their offerings, such as tokenised treasuries, central bank digital currency (CDBC) cross-border transaction scheme, and DeFi empowered capital markets.

However, high-profile incidents and risk management failures relating to operational substantiality and financial crime risks have prompted the need for stringent regulatory oversight. Regulators worldwide are solidifying a clearer regulatory landscape to facilitate compliant growth and structured management regarding digital assets and the application of distributed ledger technology (DLT).

Integrating digital assets or blockchain technologies for a FI requires comprehensive reviews of business strategies, operating models, and IT and non-IT infrastructures, alongside adherence to the dynamic and evolving regulatory requirements across various jurisdictions.

At Synpulse, we comprehend the complexities in this realm. Our end to end support covers regulatory mapping, risk typology templating, control assessments, and implementing robust frameworks, and our expertise is underscored by success stories and use cases. In this context, we identified four key themes where our digital asset solutions have supported our clients:

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For banks engaged in digital asset products or technologies, it is essential to conduct a comprehensive review of relevant regulations (i.e., regulatory inventory update) and perform a thorough regulatory mapping. This process helps identify potential gaps or shortcomings in their current procedures and controls, ensuring adherence to compliance standards.

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FIs face significant risks that are associated with on-chain assets and DLT due to their decentralised and pseudonymous nature. To combat these risks, it is crucial to establish a robust risk management framework centred on a digital asset-specific risk typology, which will enable FIs to proactively monitor, detect, and report suspicious activities, ensuring compliance with regulations and mitigating potential financial crime risks.

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As more FIs include digital assets within their product offerings, the exposure to financial crime risks increases. The inability to identify the asset origination or the source of funds (SoF) in digital asset transactions could result in regulatory violations and potential enforcement actions for non-compliance. FIs need to evaluate the current implementation, and identify areas for enhancements and provide recommendations to achieve a desirable digital asset control environment.

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The emergence of digital assets as a new asset class has introduced various risks for FIs. With the anonymity of digital asset transactions and the constantly evolving regulatory environment, the existing control frameworks may not be sufficient to mitigate the heightened risk exposure. FIs must align their control framework with various digital asset strategies and business models to effectively manage risks.

Follow our article series to learn more about the use cases of compliance and risk management in digital assets in financial services.

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