What Compliance Leaders Can’t Ignore About Blockchain and AI

Our Chief Compliance Officer, Benjamin Melnicki, unpacked the realities of AI and blockchain for financial institutions at the American Fintech Council in Washington D.C. last week. Benjamin explained why these technologies matter and what banks must do now:

Five key takeaways:

1. Novel technologies require proactive engagement: Banks can’t afford to ignore AI and blockchain. Early experimentation is essential to understand their impact on payments, lending, and market infrastructure before they become mainstream.
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2. Licensing creates opportunities with limits: National trust charters offer a path for crypto custody, but they don’t grant full banking powers like deposit-taking or lending. Institutions must weigh the benefits against significant regulatory obligations and operational costs.
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3. Consumer protection is foundational: Introducing new technologies doesn’t change existing regulatory and compliance requirements. Consumers need to know their rights and the obligations that banks have to them. For example, banks holding digital assets must provide clear disclosures on risks such as the absence of FDIC insurance for crypto custody. For AI, customers need to know what’s being done with their data.
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4. Regulatory evolution will shape scale: Legislative and rulemaking efforts, such as addressing AML gaps for unhosted wallets, are pivotal for enabling safe, large-scale blockchain integration. Institutions should monitor these developments closely to stay ahead. ‍
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5. Governance and education are critical for adoption: Boards and executives need clear, jargon-free explanations of blockchain and AI risks, mitigants, and commercial opportunities. Simplifying complex concepts builds confidence and accelerates responsible innovation.

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Watch the full session here  

https://www.youtube.com/watch?v=vPozTPujygI

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