Regulating Crypto: the path from "Wild West" to mature market

Regulating Crypto: the path from "Wild West" to mature market- Tenity Insights from Davos 2025

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Crypto innovation moves fast but can compliance keep up? Recorded live at the World Economic Forum in Davos, this episode of Innovation Connected explores the high-stakes battle between regulators and the crypto industry.

Featuring Priscilla Adams, Group Compliance Director, who brings deep expertise from both traditional finance (TradFi) and decentralized finance (DeFi), having previously worked in compliance at HSBC and KPMG.

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She joins Max Plank, Venture Partner at Tenity, to break down:

🔹 FTX’s wake-up call—how market integrity became the new regulatory obsession
🔹 MiCA, AML, and the EU’s compliance crackdown—is it working?
🔹 Meme coins, self-hosted wallets, and the next big crypto workaround
🔹 Are regulators shaping the industry, or just reacting to it?

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The compliance challenge in Crypto

The crypto industry thrives on rapid innovation, but with every breakthrough comes new scrutiny. The question isn’t just whether regulators can keep up, but whether their frameworks genuinely enhance market integrity—or simply create more barriers.

In our latest Innovation Connected episode, Max Plank, Venture Partner at Tenity, sat down with Priscilla from Bullish to discuss the evolving compliance landscape, the impact of the MiCA framework, and how regulators worldwide are responding to the ever-changing world of digital assets.

"FTX was a turning point. Suddenly, market integrity wasn’t just a buzzword—it became the main regulatory concern."

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From TradFi to DeFi: why crypto needs compliance

Priscilla’s journey from traditional finance (TradFi) to decentralized finance (DeFi) gave her a front-row seat to the evolving world of financial regulation.

"I started my career in traditional banking—what crypto folks now call ‘TradFi’—working in compliance at HSBC."

She describes how compliance frameworks in traditional banking often rely on centralized oversight, while the crypto industry presents a unique challenge due to its decentralized nature.

"In banking, you always knew who your counterparty was. In crypto? Not so much. That’s where the risk—and opportunity—lies."

This lack of transparency is precisely why regulators have been racing to implement stricter compliance rules, with the European Union leading the charge through MiCA (Markets in Crypto-Assets Regulation).

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MiCA, AML, and the European compliance crackdown

As crypto markets expand, Europe has positioned itself at the forefront of regulatory enforcement. The MiCA framework—which aims to regulate crypto exchanges, stablecoins, and asset-backed tokens—officially took effect in 2024.

Priscilla highlights the differences in regulatory focus across jurisdictions:

"In Hong Kong, regulations are shaped by a capital markets background. In Singapore, it’s all about asset management and tokenization. The EU? They're going all in on transparency and AML."

The AML (Anti-Money Laundering) measures under MiCA require exchanges to track transactions, enforce strict counterparty verification, and mitigate risks related to anonymous wallets.

"One of the biggest concerns regulators have is that crypto transactions can be anonymous and borderless. That’s why AML rules came in so fast."

While MiCA is a step forward in standardizing crypto compliance, it still has gaps, particularly when it comes to self-hosted wallets and decentralized finance (DeFi).

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The travel rule & counterparty risk in Crypto

One major regulatory challenge is counterparty risk—a problem that doesn’t exist in traditional banking, where financial institutions know exactly who they’re transacting with.

In crypto, however, that transparency is missing.

"In banking, you send money through SWIFT—you know who you're dealing with. In crypto? You might be transacting with an entity in a completely different jurisdiction and have no idea who they really are."

The Travel Rule, initially introduced by the Financial Action Task Force (FATF), is meant to fix this problem by requiring crypto firms to exchange information about senders and receivers.

But implementing this rule across global crypto exchanges has been anything but straightforward.

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Meme Coins & Market manipulation: the dark side of Crypto?

As meme coins flood the market—some backed by celebrities, others purely speculative—the line between innovation and market manipulation is becoming increasingly blurred.

"Meme coins are the hype right now, just like ICOs and NFTs were before. But the big problem? A lot of these projects have zero fundamental value."

A major concern is pump-and-dump schemes, where a few insiders artificially inflate prices before dumping their holdings—leaving retail investors at a loss.

"The biggest risk? People don’t realize that some meme coins are controlled by just a handful of insiders who cash out, leaving everyone else holding the bag."

While regulators are trying to crack down on fraud, many of these schemes remain largely unregulated due to the global nature of crypto.

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What’s next for Crypto regulation in 2025?

Looking ahead, Priscilla sees several key trends shaping crypto compliance in 2025:

1️Meme Coins & AI Tokens – Expect more speculative hype cycles, with AI-powered tokens gaining traction.
2️DeFi Regulation – As staking and lending protocols grow, regulators will look for ways to enforce AML rules in decentralized ecosystems.
3️Institutional Adoption – Tokenized assets (like real-world assets on blockchain) will continue attracting traditional financial institutions.
4️ Global Compliance Push – More jurisdictions will follow the EU’s MiCA model, tightening AML and counterparty verification.

"We’ve already seen MiCA set the tone for crypto regulation. The question now is—will the rest of the world follow?"

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Final thoughts: Regulating Crypto: Who's winning the game?

As crypto regulation evolves, the battle between compliance and innovation is far from over. While stricter rules aim to protect investors, loopholes and decentralized technologies continue pushing the limits.

"Crypto is dynamic. Just when regulators think they’ve figured it out, the industry moves on to something new."

The key takeaway? Both sides are playing catch-up.

With regulators working to close loopholes and crypto firms adapting to new rules, the real question isn’t just who’s winning—but who’s even keeping up?

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For more insights into fintech investment trends, corporate venture capital,and startup growth strategies, subscribe to Innovation. Connected – World Economic Forum Davos 2025 Edition.

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