Crypto wealth is no longer a niche phenomenon. An increasing number of high-net-worth and ultra-high-net-worth individuals hold a meaningful portion — and in some cases the majority — of their wealth in crypto assets.
As a result, traditional financial institutions are facing growing pressure from clients to either offer crypto-adjacent services or, at a minimum, onboard clients whose source of wealth includes crypto. In theory, this represents a significant opportunity. In practice, many financial institutions struggle to handle crypto onboarding in a way that is scalable, consistent, and defensible.
The challenge is not a lack of transparency. Blockchains are, by design, highly transparent. The challenge lies in how that transparency is operationalized within bank compliance frameworks.
Based on discussions with financial institutions across the board, five structural issues consistently explain why crypto onboarding remains broken in practice.
1. Crypto Introduces Risk Types That Fall Outside Traditional Compliance Experience
Compliance teams in financial institutions are highly experienced in assessing risks related to traditional financial activity. They are well equipped to evaluate source of wealth from operating companies, capital markets activity, real estate, or inheritance structures.
Crypto introduces a different risk profile. On-chain activity, self-custody wallets, decentralized protocols, and peer-to-peer transfers are often unfamiliar territory. While these activities are not inherently problematic, they are harder to contextualize using traditional compliance heuristics.
In the absence of clear internal guidance and tooling, uncertainty tends to translate into conservatism. In practice, this often results in an “in doubt, say no” approach being reflected in policies and onboarding decisions — even where risks may be manageable.
2. Crypto Onboarding Is Often Handled Through Manual, Expert-Driven Processes
Where financial institutions do accept crypto wealth, onboarding is frequently handled through manual processes. Reviews are concentrated with one or two internal specialists and supplemented by external consultants.
This approach is costly, time-intensive, and difficult to scale. Each case becomes a bespoke exercise, timelines stretch, and outcomes may vary depending on who performs the analysis.
For higher-value clients, this may be tolerated occasionally. For lower- and mid-range assets under management, it is not economically viable. As volumes increase, financial institutions are again pushed toward rejecting clients — not because the risk is unacceptable, but because the process does not scale.
3. Existing Tools Were Built for Investigations, Not Day-to-Day Compliance
Most tools used today to assess crypto activity originated in investigations, asset recovery, or law enforcement contexts. Their strength lies in depth such as reconstructing mixer activity.
For routine onboarding, this depth often becomes a weakness. Workflows are complex, outputs require expert interpretation, and results are typically expressed as abstract risk scores rather than clear guidance.
In addition, user-based pricing models tend to reinforce centralization of expertise, creating operational bottlenecks. Instead of enabling broader teams to handle crypto onboarding, these tools often entrench dependency on a small number of specialists.
4. Financial Institutions Are Forced to Rely on Expensive, Point-in-Time External Reviews
As a consequence, many institutions outsource source-of-wealth and source-of-funds analyses for crypto onboarding to external providers. These reviews are typically performed as one-off assessments and come at a significant cost.
Beyond the financial burden, point-in-time analyses only provide a historical snapshot. They do not address how client risk evolves after onboarding, nor do they support ongoing oversight.
For prospective clients, this creates a fundamental mismatch: financial institutions are asked to invest substantial resources upfront, without certainty that the client can or will ultimately be onboarded.
5. Point-in-Time Analysis Does Not Meet Lifecycle Monitoring Expectations
Perhaps most importantly, regulators do not view crypto onboarding as a one-time exercise. Institutions are expected to monitor clients with crypto exposure throughout the client lifecycle.
This includes periodic re-assessments as well as continuous transaction monitoring to identify new exposure to sanctioned, high-risk, or suspicious counterparties. One-off reviews and manual processes cannot meet these expectations in a sustainable way.
Without integrated monitoring, financial institutions are left exposed to risk changes that occur after onboarding — precisely when supervisory scrutiny is highest.
Moving from Fragmentation to Lifecycle-Based Oversight
The issues outlined above are structural, not temporary. They stem from a mismatch between how crypto compliance tools evolved and what financial institutions actually need in day-to-day operations.
Addressing these challenges does not require deeper investigations. It requires a different approach: one that treats crypto onboarding and monitoring as part of a continuous, policy-aligned lifecycle.
This is where WalletCheck comes in. WalletCheck provides a single platform designed specifically for compliance teams, supporting crypto onboarding, periodic reviews, and continuous transaction monitoring in one integrated workflow. Decisions are documented automatically, and audit-ready reports can be generated at any time to support internal governance, audits, and regulatory requests.
Crypto onboarding does not need to be complex to be robust. It needs to be structured, scalable, and defensible.
If you would like to learn more about our approach or see how WalletCheck supports crypto onboarding across the full client lifecycle, please reach out to:
