Crypto's Institutional Moment: What TradFi's Move Means for AML and Accounting Teams
The question of whether traditional finance would ever seriously engage with digital assets has been answered. At a panel convened at London's Guildhall and reported by TRM Labs, senior figures from BNY Mellon, Goldman Sachs, and State Street described institutional adoption not as a future possibility but as an accelerating present reality, one already creating compliance obligations that accounting firms, auditors, and CFOs cannot afford to defer. For any team evaluating crypto accounting software or AML workflows, the signals from this event are directly actionable.
What the Guildhall Panel Actually Said
TRM Labs convened the discussion to explore how traditional financial institutions are engaging with the digital asset space. The participants represented some of the most systemically significant institutions in global finance, and the tone was notably unambiguous.
Client demand is the primary driver
Michael Demissie of BNY Mellon framed institutional adoption as part of a structural shift, describing it as a "mega-trend" in which traditional assets migrate onto blockchain rails and benefit from the design innovations native to that infrastructure. Critically, he was clear that BNY Mellon did not enter this space speculatively: the firm responded to demand from existing clients who wanted digital asset services delivered through a counterparty they already trusted.
That framing matters enormously for compliance teams. When adoption is client-led rather than institution-led, the pace is harder to control and the risk of outrunning internal controls is higher. Institutions that move quickly to satisfy client demand can find their AML frameworks, transaction monitoring rules, and accounting processes lagging behind the product reality.
Tokenisation, stablecoins, and CBDCs are central, not peripheral
Swen Warner of State Street was explicit: the transformation underway is "not just crypto." It encompasses tokenisation of traditional assets, stablecoins, and central bank digital currencies. Matthew McDermott of Goldman Sachs echoed the same conviction, describing a strong institutional belief that blockchain technology will restructure financial markets broadly.
For accounting and audit teams, this is a critical clarification. Firms that have scoped their digital asset policies narrowly around Bitcoin or Ethereum holdings may be underprepared. Tokenised securities, stablecoin settlement rails, and CBDC instruments each carry distinct accounting treatment questions, and the regulatory frameworks governing them are evolving at different speeds across the US, UK, and EU.
Talent is flowing from TradFi into crypto
Frederic Brown, a former Goldman Sachs executive, offered a revealing data point about the cultural shift inside large institutions. Where management at his former employer had been broadly opposed to Bitcoin-related projects just a few years ago, the view has reversed. Candidates coming from investment banking are now actively seeking roles closer to digital assets. That talent migration brings rigour to crypto-native firms, but it also raises the bar for the professional services firms that audit and advise them: those firms need digital asset accounting software and AML tooling that meets the expectations of staff trained in highly regulated traditional finance environments.
Regulatory clarity is as important as regulatory substance
All panellists converged on one practical observation about regulation: clarity matters as much as the content of the rules themselves. The suggestion was to operate as though digital assets are already in a fully regulated environment, even where the formal framework is still catching up. For compliance officers and finance teams, that is not just good advice; it is the standard that regulators in the UK, US, and EU are increasingly applying in practice, regardless of whether final rules are on the statute book.
AML Implications for Firms Serving Institutional Clients
The institutional adoption described at the Guildhall panel does not simply expand the market for digital assets. It restructures the risk profile of that market in ways that compliance teams need to map carefully.
Higher transaction volumes and cross-jurisdictional flows
Institutional-scale activity means larger individual transactions, more frequent settlement activity, and flows that routinely cross multiple jurisdictions in a single trade. Each of those characteristics adds complexity to transaction monitoring. AML rules calibrated for retail crypto volumes, or designed primarily around spot Bitcoin transfers, will generate false negatives when applied to institutional stablecoin settlements or tokenised asset transfers.
Firms should review whether their current monitoring thresholds and typology libraries reflect the behaviour of institutional counterparties. Where they do not, the gap represents a genuine regulatory exposure, particularly under the UK's Money Laundering Regulations, the EU's forthcoming AMLR package, and US Bank Secrecy Act obligations that apply to digital asset businesses.
VASP due diligence at institutional scale
The Guildhall panel highlighted that crypto-native businesses, including those offering white-label custody and brokerage infrastructure to traditional banks, are now operating as critical service providers to regulated institutions. That relationship triggers VASP due diligence obligations on both sides. A bank offering crypto custody through a third-party infrastructure provider cannot outsource its AML liability to that provider. It must conduct and document its own risk assessment of the arrangement, covering the provider's licensing status, ownership structure, transaction monitoring controls, and sanctions screening capabilities.
For accounting firms and auditors, this creates a new category of client risk to assess. If a client institution relies on a white-label crypto infrastructure provider, the audit of that arrangement needs to reach into the AML controls of the underlying provider, not just the contractual terms governing the relationship. We have covered how AI is reshaping crypto AML supervision across the FCA, VARA, and HKMA, and those supervisory expectations are now relevant to the institutional tier of the market as well.
NFTs, tokenised assets, and the scope of existing AML policies
Guillaume Chatain from Coinbase noted that institutional clients are using prime broker platforms to engage with NFTs alongside more conventional digital assets. Michael Demissie of BNY Mellon pointed to NFTs as a potential tool for reducing friction in authentication processes within the financial system. Both observations suggest that NFTs are moving from a speculative consumer product into a functional component of institutional workflows. AML policies that treat NFTs as out of scope, or that apply only generic high-risk flags without specific typology guidance, are likely to be inadequate as this use case develops.
Accounting and Reporting Obligations: What Changes at Institutional Scale
The shift from retail to institutional digital asset activity is not just a volume change. It introduces accounting questions that are qualitatively different from those arising in consumer-facing crypto businesses.
Classification of tokenised assets under IFRS and US GAAP
Tokenised representations of traditional assets, such as tokenised bonds, fund units, or real estate interests, do not map cleanly onto existing asset classification frameworks. Whether a tokenised instrument is accounted for as the underlying asset it represents, as a financial instrument in its own right, or as a different category entirely will depend on its specific legal structure and the rights it confers. Neither IFRS nor US GAAP has issued definitive guidance covering all variants currently in the market. Firms advising institutional clients holding these instruments need to document their accounting policy choices carefully and revisit them as standard-setter guidance develops.
Stablecoin settlement and balance sheet presentation
State Street's reference to stablecoins as a core component of the institutional infrastructure, rather than a niche instrument, creates immediate accounting questions. Stablecoins held as operational balances for settlement purposes may be classified differently from stablecoins held as investments or speculative positions. The distinction affects where they appear on the balance sheet, how they are measured, and what disclosures are required. Firms using digital asset accounting software need to confirm that their chosen tools can handle stablecoin-specific classification rules and can produce the audit trail required to support the chosen treatment.
Custody arrangements and off-balance-sheet risk
The panel's discussion of white-label custody infrastructure raises a specific accounting risk. When a traditional bank offers crypto custody to clients through a third-party provider, the question of whether the custodied assets appear on the bank's balance sheet depends on the legal structure of the arrangement. If the bank is acting as a principal custodian and sub-delegating to the technology provider, the accounting may differ from an arrangement where the bank is acting purely as an agent. Getting this wrong has balance sheet and capital adequacy implications, and it is an area where robust digital asset accounting software, combined with clear legal documentation of the custody structure, is essential.
Teams navigating US regulatory dimensions should also review what the GENIUS Act rewrite means for US crypto compliance teams, since stablecoin custody and issuance are directly addressed in that legislation.
Practical Steps for Compliance and Finance Teams Now
Map current policies against institutional-scale risk
The starting point is an honest assessment of whether existing AML and accounting policies were designed with institutional digital asset activity in mind. Policies drafted for retail crypto exposure will typically need revision on transaction monitoring thresholds, VASP due diligence procedures, stablecoin and tokenised asset classification, and custody accounting treatment.
Evaluate whether existing crypto bookkeeping software can handle the scope
Institutional clients generate transaction data at a scale and complexity that many earlier-generation crypto bookkeeping software tools were not designed to handle. Multi-asset portfolios combining spot crypto, stablecoins, tokenised securities, and NFTs require a system capable of applying different accounting rules to each category, producing consolidated reports that satisfy auditors, and maintaining a chain-of-custody record adequate for regulatory review. Evaluating whether current tooling is fit for this purpose is not a future task; the institutional adoption described at the Guildhall panel is already in progress.
Engage with regulatory developments proactively
The panellists' advice to behave as though digital assets are already fully regulated is the most practically useful takeaway for compliance teams. In the UK, the Financial Conduct Authority is actively consulting on a permanent crypto regulatory framework. In the EU, MiCA is live and its AML dimensions are being operationalised. In the US, legislation and regulatory guidance are both moving. Firms that wait for final rules before updating their frameworks will find themselves behind their institutional clients and behind regulator expectations simultaneously.
Frequently Asked Questions
Does institutional adoption of crypto change the AML obligations for accounting firms advising those institutions?
Yes. When clients are institutional-scale digital asset participants, the due diligence requirements become more extensive. Firms need to assess not only the client's own AML controls but also the controls of any third-party infrastructure providers the client relies on for custody, settlement, or brokerage services. This extends the scope of engagement significantly beyond what most firms currently apply to crypto clients.
How should tokenised traditional assets be accounted for under IFRS?
There is no single definitive answer yet. The accounting treatment depends on the specific legal rights conveyed by the token and the structure of the issuing arrangement. Firms should document their policy position clearly, note the absence of authoritative guidance, and flag the judgment involved in their financial statement disclosures. This is an area to monitor closely as the IASB and FASB develop further guidance.
What due diligence is required before a regulated institution can use a white-label crypto infrastructure provider?
At minimum, the institution must assess the provider's regulatory authorisation or registration status in relevant jurisdictions, its AML and sanctions screening controls, its ownership and governance structure, and its operational resilience arrangements. The institution cannot delegate its own AML liability through a commercial contract; it retains responsibility for the services it offers to clients, regardless of the underlying infrastructure provider.
Are stablecoins used for settlement classified as cash or cash equivalents?
Not automatically. Whether a stablecoin qualifies as a cash equivalent under IAS 7 or ASC 230 depends on factors including its liquidity, convertibility, and whether it is subject to insignificant risk of change in value. Algorithmic stablecoins or those with redemption restrictions are unlikely to qualify. Regulated fiat-backed stablecoins may qualify in some circumstances, but the analysis is fact-specific and should be documented.
How does the panel's discussion of NFTs as authentication tools affect how firms should classify NFTs held by institutional clients?
The functional purpose of an NFT affects its accounting classification. An NFT held as an authentication or access credential within a business process is likely to be treated differently from one held as a financial investment or for resale. Firms should assess the specific use case and document the basis for classification, particularly as institutional use cases for NFTs evolve beyond the speculative consumer market.
Source: TRM Labs