Exploring Regtech: Key Technologies in Combating Financial Crime

Regtech ( Regulatory Technology ) is an important tool for ensuring that industries and consumers comply with legal regulations. It is like the braking system of a high-performance vehicle, allowing the financial "engine" to run at high speeds while ensuring safety and control. Regtech is particularly important in the financial sector because a healthy and stable financial system is crucial for social development and the well-being of the public.

The emergence of virtual assets has brought new challenges and opportunities for financial regulation. Compared to traditional markets, the cryptocurrency market operates around the clock and has no geographical restrictions, which requires regulatory technology to be able to monitor trading activities in real-time automatically. At the same time, the technical characteristics of virtual assets also make traditional regulatory measures difficult to apply. However, the highly transparent financial system based on blockchain is actually beneficial for regulation. For example, criminal activities that are difficult to trace in traditional finance are exposed on the blockchain.

When financial institutions transition to the virtual asset market, they need to adjust their compliance and Regtech capabilities. The key is to add technological elements that adapt to the characteristics of virtual assets on top of traditional financial regulation. This includes systems capable of detecting on-chain and off-chain issues, as well as the ability to operate around the clock and use artificial intelligence to process risk data.

In KYC(, while centralized exchanges are increasingly requiring comprehensive KYC, decentralized applications usually do not have such requirements. This necessitates that regulated crypto companies possess on-chain regulatory capabilities to ensure the compliance of the source of funds. AML) Anti-Money Laundering( requires cross-monitoring of on-chain and off-chain activities to address the complex methods criminals use to hide funds.

![Exploring Regtech: What financial crimes does Reg Tech technology mainly address?])https://img-cdn.gateio.im/webp-social/moments-96def5e724b3d89f039809dca5c02900.webp(

The cryptocurrency market has some unique forms of abuse. For example, research shows that 56% of DeFi tokens exhibit insider trading behavior on decentralized exchanges. Another example is smart contract scams, with a new scam token appearing on average every 4 minutes. These issues highlight the importance of crypto-native regulatory approaches.

Hong Kong is at the forefront of virtual asset regulation in the world. The guidelines recently published by the Hong Kong Securities and Futures Commission provide comprehensive and clear guidance for the licensing framework. Regulatory requirements include the adoption of effective market monitoring systems to identify and prevent market manipulation or abuse activities. These requirements have driven the development of regulatory technology solutions specifically aimed at cryptocurrencies, helping to establish a safer and more regulated virtual asset trading environment.

![Exploring Regtech: What Financial Crimes Does Reg Tech Technology Mainly Address?])https://img-cdn.gateio.im/webp-social/moments-1f503f102e24875d0a6530b48fc7ee8c.webp(