NY Regulator Pushes Banks to Adopt Blockchain in Fight Against Illegal Activity

New York's financial watchdog just dropped a bombshell—telling traditional banks to weaponize blockchain against criminals.

Why Blockchain Changes Everything

Immutable ledgers don't lie. Every transaction gets etched in digital stone—making money laundering harder than explaining crypto to your grandparents.

The Compliance Revolution

Forget paperwork mountains. Real-time tracking cuts through bureaucratic red tape like a hot knife through butter. Suspicious patterns get flagged before the coffee gets cold.

Wall Street's Ironic Twist

The same institutions that once called crypto a scam now get regulatory blessing to use its backbone—because nothing motivates banks like being told how to avoid fines.

Welcome to 2025, where regulators endorse the tech they used to fear, and banks finally learn that innovation beats investigation every time.

Regulator Recommend Blockchain Analytics as a Safety Net

The regulator said banks should not wait until problems appear. Instead, they should use this system in daily checks. For instance, in screening customer wallets, and checking the source of funds. It also advised banks to study customer behavior and compare expected activity with actual transactions to spot unusual moves.

“Emerging technologies introduce new and evolving threats that require new tools, such as blockchain analytics, with enhanced capabilities to aid risk identification and mitigation.” the department said. It also reminded banks that they play a “critical role in safeguarding the integrity of the financial ecosystem to prevent illicit activities like money laundering, terrorist financing, and sanctions evasion.”

Past Guidance and New Steps Forward

Meanwhile, this is not the first time banks WOULD be encouraged to adopt blockchain in their system. Back in April 2022, the department released its Guidance, which told licensed virtual currency businesses to rely on blockchain technology for risk checks. 

Later the same year, the department issued more instructions under the Virtual Currency-Related Activity Guidance, saying banks and foreign branches needed approval before starting new crypto projects.Since then, the regulator has seen more banks showing interest in virtual currencies, either through their own projects or customer demand. 

Moreover, Officials believe blockchain analytics can give banks better intelligence to handle these risks. Banks were also told to adjust tools to match their business models and to update their risk frameworks regularly as markets and customer types change.

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