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Crypto, Crime, and Compliance: What Every Bank, Regulator, and Fintech Needs to Know

A new peer-reviewed law review published study compares how the UK, New York, and Hong Kong regulate crypto—and what happens when they get it wrong.

The Short Version (30 Seconds)

Cryptocurrency is not anonymous. Criminals who thought it was are learning otherwise. Governments in major financial centres are cracking down—but each does it differently. A new study published in the City University of Hong Kong Law Review examines how England, New York, and Hong Kong regulate crypto to prevent money laundering and terrorist financing.

The bottom line: The Wild West days are ending. Regulators are winning. And businesses need to adapt.

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Why This Matters

Banks worry about exposure to dirty money. Regulators worry about gaps in their rules. Fintechs worry about which jurisdiction to choose. And ordinary people worry about getting scammed.  All of them face the same problem: crypto does not respect borders, but regulations do.

This research looks at what happens when these worlds collide—and what we can learn from recent enforcement actions.

Three Jurisdictions, Three Approaches

Jurisdiction	Approach	In Plain English
England & Wales	Principles-based	"Here are the goals. You figure out."
New York	Rules-based (BitLicense)	"Here is a rulebook. Follow every line."
Hong Kong	Hybrid	"Follow the rules, but open for innovation."

No single approach is perfect. But all three are now enforcing their rules—aggressively.

 

Real Cases, Real Consequences

The study examines recent enforcement actions that every compliance professional should know.

United Kingdom

• R v Jian Wen (2024): A woman used Bitcoin to launder millions of from a Chinese investment scam. She bought property in Dubai and paid school fees with dirty money. Sentence: 80 months in prison.

• R v Olumide Osunkoya (2023): A man operated unlicensed Bitcoin ATMs across the UK, processing £2.6 million. Outcome: Conviction under Money Laundering Regulations.

• CB Payments Limited (2024): A Coinbase subsidiary fined £3.5 million for AML failures, including onboarding 13,400 high-risk customers despite a regulatory agreement not to.

New York

• KuCoin (2023): A major crypto exchange operated without a BitLicense, serving 150,000 New York customers. Penalty: US$22 million settlement + customer refunds.

• Gelfman Blueprint (2018): A Bitcoin investment firm ran a Ponzi scheme, defrauding investors of over US$600,000. Penalty: US$2.35 million in restitution and fines.

• Winklevoss Capital v Shrem (2019): A US$32 million Bitcoin dispute settled privately—but highlighted the legal risks of crypto custody.

Hong Kong

• JPEX investigation (2023-present): An unlicensed exchange allegedly took HK$ 1.6 billion from investors, then locked them out. Status: Criminal investigation ongoing; over 2,600 complainants.

• US v Hayes (BitMEX, 2022): The founder set up in Hong Kong to avoid US rules, but served US customers without AML controls. Penalty: US$10 million fine + home detention.

• Chan Wing Yan v JP-EX (2024): Court recognised cryptocurrency as property capable of being held in trust—a landmark ruling for investor protection.

The message: Regulators are watching. They are cooperating across borders. And they are winning.

Beyond the Big Three: Emerging Jurisdictions

While London, New York, and Hong Kong dominate headlines, other jurisdictions are quietly building influential regulatory models.

Jurisdiction	Approach	Key Feature
Estonia	Strict licensing	High capital requirements (€100k-€250k); physical presence mandatory
Dubai (UAE)	Tiered framework (VARA)	Balances innovation with FATF-aligned AML safeguards
South Korea	Rules-based + Travel  Rule	Real-name accounts; FSC oversight; ISMS certification required

Takeaway: No jurisdiction is a "safe haven" anymore. Each offers lessons—but all are raising the bar.

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The Future: Central Bank Digital Currencies (CBDCs)

Governments are not just regulating crypto—they are building their own.

Central Bank Digital Currencies (CBDCs) are state-issued digital money. Unlike Bitcoin, they are fully traceable and controlled by central banks.

Example	Status
China (e-CNY)	Already in circulation; used for payroll and cross-border trade
EU (Digital Euro)	In design phase; focused on privacy and AML compliance

Why this matters for AML/CFT:

• CBDCs have built-in identity verification and transaction traceability

• They offer a government-backed alternative to private stablecoins

• Regulators may eventually raise compliance expectations for all digital assets to match CBDC standards

Bottom line: The future of digital money is traceable. Private crypto will need to meet increasingly high bars—or be left behind.

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What This Means for You

🏦 For Banks

Risk	Action
Crypto clients may launder money through your accounts	Strengthen AML monitoring for crypto-related transactions
Regulators expect you to know your customers' crypto activity	Train staff to spot red flags
Partnerships with unlicensed exchanges fines	Vet all crypto partners against local licensing requirements

📜 For Regulators

Insight	Implication
The UK's flexibility requires strong enforcement	Invest in supervision, not just rule-writing
New York's strictness deters some firms but protects consumers	Consider tiered licensing for smaller players
Hong Kong's hybrid model is promising but unproven in crisis	Share data and cooperate across borders
Emerging jurisdictions are raising standards	Monitor Estonia, Dubai, and South Korea for best practices
CBDCs will reshape the landscape	Plan now for integration with digital fiat systems

⚙️ For Fintechs and Crypto Firms

Challenge	Opportunity
Multiple rulebooks across jurisdictions	Build compliance into your product from day one
Licensing is expensive and slow	Use it as a competitive advantage: licensed firms are trusted
Enforcement is increasing	Work with regulators; don't hide from them
CBDCs may compete with stablecoins	Explore partnerships with central banks and payment systems

🧑‍💼 For Everyone Else

• Crypto is not anonymous: Police can trace it.

• Scammers love crypto: If someone promises guaranteed returns, it's probably a scam.

• Use licensed platforms: Unlicensed ones can vanish overnight (see: JPEX).

• CBDCs are coming. They will change how you pay—and how governments track money.

One sentence: Crypto is here to stay, but the Wild West days are ending.

The Big Idea: A Global Solution

The study proposes something ambitious: a binding international treaty for crypto regulation, modeled on the UN Convention on Contracts for the International Sale of Goods (CISG).

Just as the CISG harmonised sales law across 90+ countries, a global crypto treaty could:

• End regulatory arbitrage (the game of "jurisdiction shopping")

• Give businesses one rulebook to follow

• Protect consumers everywhere

This would take years—but it is the right direction.

How Leveler Can Help

At Leveler Limited, we don't just study the rules. We help you follow them.

Our director's published research gives us deep insight into how regulators think and where enforcement is heading.

We work with:

• Banks to strengthen AML frameworks for crypto exposure

• FinTechs to prepare for licensing and compliance

• Corporates to assess risk in crypto payments and investments

• Regulators by helping the industry meet expectations

We offer:

• AML/CFT framework reviews

• KYC/CDD/EDD procedures and training

• Regulatory gap analysis

• Licensing support

• Expert commentary and board training

Read the Full Study

For those who want the depth, the peer-reviewed article is available:

"Regulated: Cryptos, ICOs, Stablecoins, and AML/CFT in Different Global Financial Centres"
City University of Hong Kong Law Review, Volume 10, pages 27-73 (2025)

📄 SSRN 📄 ResearchGate 📄 HeinOnline

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Full article cited as:

Yuk Kevin Chung Hau, "Regulated: Cryptos, ICOs, Stablecoins, and AML/CFT in Different Global Financial Centres", 10 City U. H.K. L. Rev. 27-73 (2025)

About the Author

Kevin Yuk is Director of Leveler Limited and holds an LL.M. from Peking University School of Transnational Law and a LLB (Hons) Law from University of Essex. He has over two decades of international experience, including in AML/CFT compliance across banking and manufacturing and supply chain in Hong Kong, the US, and mainland China. He is trilingual and authorised to work in all three jurisdictions.

Contact Us

Crypto regulation is no longer a niche concern. It affects banks, businesses, and ordinary people. The rules are complex, but the direction is clear: compliance is not optional.

Leveler Limited helps you navigate the complexity.

Contact us for a confidential discussion.

Written: By: Kevin Yuk, 23 February 2026