Why real-time monitoring and anomaly detection are essential for crypto compliance

Crypto has a trust problem.

According to a survey of 1,013 people for CoinCover’s comprehensive The Trust Factor report, only 9% of respondents fully trust their crypto provider’s security measures. It’s one of crypto’s most fundamental challenges: investor confidence remains fragile despite growing institutional adoption, emerging regulatory frameworks, and billions in custody across the ecosystem.

Investors want stronger protection of their crypto. Case in point: 79% of survey respondents believe that crypto platforms should have mandatory compensation schemes to cover investor losses from hacks and technical failures. They want regulators to implement legislation that protects investors just as well as they’re protected in traditional banking.

As such, crypto platforms and institutions can most effectively serve their customers’ security requirements with proactive security measures that stop threats before they materialise. In particular, with real-time monitoring and anomaly detection, both of which help prevent fraud while equally demonstrating to their customers and to regulators that security is not an afterthought.

Download The Trust Factor report to access the other surprising insights from the survey.

Why real-time monitoring?

Crypto’s 24/7 nature requires 24/7 oversight. Some legislation already reflects this: Europe's MiCA framework emphasises live controls and real-time risk management. The EU's DORA regulation requires financial entities to maintain continuous Information and Communication Technology (ICT) risk monitoring. Even in jurisdictions still developing crypto frameworks, regulators expect crypto platforms to demonstrate real-time awareness of their risk exposure.

Aside from the regulatory requirements, fraud and risk events happen rapidly in the blockchain industry. Unlike traditional finance, where markets have set operational hours and can be reviewed or even cancelled before they complete, crypto transactions are irreversible and occur instantly across global markets. When threats materialise, platforms sometimes only have minutes to respond effectively. Any delay in detection is an opportunity fraudsters can exploit.

Why anomaly detection?

Anomaly detection provides the intelligence layer that makes real-time monitoring effective. Where real-time monitoring captures transaction data as it happens, anomaly detection algorithms analyse this data to identify patterns that indicate fraud or policy breaches. Potential anomaly scenarios include:

• Rapid withdrawal patterns that suggest compromise or policy override
• Geographic anomalies with sudden spikes in transactions from flagged jurisdictions
• Dormant wallet reactivation indicating a potential account takeover
• Threshold manipulation with transactions structured just under reporting limits
• Multi-signature inconsistencies suggesting unauthorised access attempts

The benefits of technology-driven compliance

Despite its importance, it’s not easy staying compliant as a crypto platform. As Lucia Slater, Director of Web3 Policy Space, explains: "Compliance costs can be high, and that creates barriers to entry. Governments will need to support innovation by ensuring access points remain, such as offering regulatory sandboxes to allow smaller players to operate temporarily without full compliance requirements."

Along with regulatory access points, technology offers a sustainable way forward too. Instead of relying exclusively on human oversight, which can introduce vulnerabilities and scaling challenges, platforms like CoinCover demonstrate how real-time monitoring and automated anomaly detection can provide comprehensive fraud protection that serves as the foundation for customer trust and continued growth.

Slater points out that "most crypto companies, in fact, want regulation. It gives them predictability and helps them make long-term investments. It also provides clarity around consumer protections and operational expectations." For crypto platforms and institutions, tech-driven compliance can become a differentiator in several ways:

• Audit readiness: immediate access to comprehensive transaction logs and control evidence
• Regulatory relationships: demonstrated commitment to proactive risk management
• Institutional access: meeting the due diligence requirements of large investors
• Proactive security: preventing losses rather than managing post-incident recovery

CoinCover's approach exemplifies this regulatory alignment in practice. For example, CoinCover Protect supports MiCA Article 92.1 requirements for market abuse prevention. The regulation mandates that "any person professionally arranging or executing transactions in crypto-assets shall have in place effective arrangements, systems and procedures to prevent and detect market abuse." CoinCover Protect's real-time monitoring and anomaly detection capabilities help platforms identify suspicious transaction patterns and potential market manipulation before they can cause harm.

Technological solutions don’t just improve security with their real-time monitoring and anomaly detection. They also significantly reduce the compliance burden for crypto platforms. Instead of having to maintain large compliance teams to manually review transactions and compile reports, automated systems generate comprehensive audit trails and regulatory evidence in real-time. With one technological solution, platforms can:

• Demonstrate compliance to regulators immediately
• Avoid costly post-incident investigations
• Meet requirements across different jurisdictions

Sustainable growth in the crypto industry

Both transparency and accountability are essential for sustainable growth in the crypto industry. The Trust Factor survey found that 67% of retail investors would be more likely to invest if crypto were regulated like traditional finance. Institutional players, who have significantly more money at stake, share similar concerns about regulatory clarity and want transparency across the entire transaction lifecycle, from initiation through settlement to final custody. 

CoinCover directly addresses these concerns by providing its customers with demonstrable protection that retail and institutional investors, as well as regulators, can understand and verify. It leans into a future where crypto platforms are compliant, secure, and well-trusted.

Do you want to learn how eight industry leaders think about the future of crypto?

Download The Trust Factor report to gain access to all the interviews, along with all the insights from the survey.