Chapter 10 Cryptocurrency and Financial Crime Regulatory Responses in the US UK and South Africa.docx

Abstract

Cryptocurrencies have enabled new forms of financial crime – ransomware payments, money laundering via mixers, and exchange fraud – while also challenging traditional regulatory boundaries. This chapter compares the regulatory responses of the United States, the United Kingdom, and South Africa to crypto‑related financial crime. The US has a fragmented but aggressive regime: the SEC treats most tokens as securities, the CFTC regulates derivatives, and FinCEN imposes AML obligations on money service businesses. The UK has a more unified approach under the FCA, which supervises crypto asset activities under the Money Laundering Regulations. South Africa has declared crypto assets as financial products under the Financial Advisory and Intermediary Services (FAIS) Act, but enforcement is nascent. Using FATF’s Travel Rule as a benchmark, we assess each country’s implementation, de‑risking practices, and cross‑border cooperation. We find that all three struggle with unhosted wallets and decentralised finance (DeFi). Bridging strategies include a trilateral information‑sharing arrangement for crypto‑related SARs, joint blockchain analytics training, and a harmonised approach to DeFi regulation. The chapter concludes that without global coordination, crypto criminals will arbitrage regulatory gaps.