By 1998, the Nobel Prize-winning economist Paul Krugman had concluded that the internet's impact on the economy would prove no greater than that of the fax machine. This was cited at Transform Finance's Amsterdam summit not to mock a distinguished economist, but to make a point about the limits of intuition when confronting genuinely novel technology. Cryptocurrency, the speaker argued, deserves the same charitable reconsideration.

The presentation that followed was one of the most practically useful of the day - not because it minimised the risks of crypto assets in the financial crime context, but because it took seriously the question that too many compliance functions have not: how does this technology actually work, and what does that mean for those trying to police it?

The ledger that never forgets

The most important single characteristic of a public blockchain is that it is fully transparent, permanently accessible, and free to interrogate. Every transaction ever conducted on those networks is visible to anyone with an internet connection, without a warrant, without a data sharing agreement, and without a counterparty's cooperation.

This is not a marginal feature. It is structurally the opposite of the banking system, in which transaction data is held by regulated intermediaries, accessible only through formal legal process, and subject to data protection frameworks that constrain how it can be shared or used. The blockchain is a public record. It has always been a public record. It will always be a public record.

The compliance implication is significant. A financial institution trying to understand whether a crypto wallet it is dealing with has exposure to illicit activity does not need to subpoena anyone. It needs a block explorer - a free, publicly available tool - and, for more sophisticated analysis, a commercial blockchain analytics platform. These tools can map an address's full transaction history, identify its counterparties, flag direct and indirect exposure to known illicit actors, and cluster multiple addresses into probable entity groupings, all from open-source data.

Live demonstration at the summit showed a single wallet's history laid out in full: exchange deposits and withdrawals over six years, stablecoin holdings, counterparty connections to gambling services, mixing protocols and high-risk exchanges, all visible and navigable within minutes. A commercial platform extended this to cross-chain analysis - the same entity's activity tracked simultaneously across Polygon, Ethereum and Arbitrum - and to a network graph showing the full web of financial relationships.

"Anyone can access every blockchain at any time, from anywhere, forever, for free," the presenter said. That is a tool. The question is whether the industry is using it.

The illicit share - in context

The summit heard the figures on illicit activity in crypto with appropriate seriousness, but also with appropriate context. Blockchain analytics firm data suggests that illicit activity accounts for a small fraction of total crypto transaction volume - and that this fraction is not growing as a percentage of the overall market, even as the market itself expands.

More instructive is the shift in which assets are used for illicit purposes. Bitcoin, dominant in the early years simply because it was the only option, has given way in illicit use to stablecoins - cryptocurrency tokens pegged to fiat currencies, typically the US dollar. Stablecoins now account for the largest share of illicit crypto volume, and the direction of travel is clearly upward.

The explanation is not difficult. Criminals dislike volatility. A sum of money laundered through Bitcoin in 2021 might have lost 70 per cent of its value by the time it was ready to use. A sum moved through USDT retains its dollar value throughout the laundering chain. The same logic that makes stablecoins attractive for legitimate cross-border settlement makes them attractive for criminal purposes - and the volumes flowing through the largest stablecoin networks are now large enough that even a small percentage of illicit activity represents very significant sums in absolute terms.

For financial institutions that are building stablecoin infrastructure, it is central to the business case, not a peripheral risk management consideration.

What the industry is not yet doing

The presenter's closing observation carried the most pointed implication for the room. As crypto assets merge with traditional financial infrastructure through MICA licensing, stablecoin integration in payment systems, and the expanding range of regulated crypto service providers - the primary compliance challenge is migrating from the crypto-native firms that have spent years developing blockchain forensics capabilities to the traditional financial institutions that are now acquiring exposure through their own product development.

The crypto firms represented at the summit had invested substantially in blockchain monitoring expertise: dedicated analytics teams, commercial intelligence platforms, internal training programmes, and compliance functions staffed specifically for crypto typologies. Several legacy institutions in the room, by their own admission, were dealing with blockchain exposure they did not yet have the tools to assess.

"The biggest risk in crypto," the presenter said, "might not be the crypto guys. It is going to be the traditional banks - and the AML departments still having a very hard time with blockchain monitoring."

The tools exist. They are, in many cases, free. The gap between the risk that is accumulating and the capability that exists to manage it is not primarily a technology problem. It is a prioritisation problem.

Stablecoins: systemic potential, systemic risk

The summit's final panel of the day returned to stablecoins with a longer view. For the crypto compliance professionals on the panel, the significance of stablecoins extends well beyond their current use as a medium of exchange and store of value for crypto-adjacent activity. They represent, in their view, the most plausible near-term mechanism for the full integration of blockchain infrastructure into the mainstream payments and banking system.

Several large financial institutions are already building stablecoin issuance capability. Payments companies are exploring stablecoin settlement rails for cross-border transactions. In Nigeria, one panellist noted, stablecoins have effectively replaced Visa and Mastercard for certain categories of retail payment - not as an experiment, but as default consumer infrastructure.

The compliance architecture for this future must be built now. That means, among other things, taking seriously the burn-and-freeze capabilities that stablecoin issuers retain - the ability to render a stablecoin permanently inaccessible if it lands in a sanctioned wallet, effectively seizing criminal proceeds in a way that the traditional financial system struggles to achieve. It means building the monitoring capacity to detect illicit flows through stablecoin networks using the blockchain transparency that those networks inherently provide.

This means engaging now with the regulatory frameworks like the MiCA, the Travel Rule, and forthcoming FATF guidance, that will define the compliance standard before the business scale makes retrofitting prohibitively complex.

"Stablecoins are not just another crypto asset class under MiCA," one panellist argued. "They are the future infrastructure of the payments and banking industry. The fight against misbehaviour in that infrastructure is not only a crypto problem. It is a broader financial system problem."

This article is part of Transform Finance's coverage of the 4th Annual FinCrime Leaders Summit Europe, Amsterdam 2026. This article reflects a session held under Chatham House rules. To respect those conditions, comments have not been attributed to individual speakers or organisations.