Alexandra Lloyd, HEAD OF AML at YouHodler, at Vienna Blockchain Week: Compliance by Design - Turning Obligations into InnovationAt the Vienna Blockchain Week, an event hosting Web3 builders, regulators, Innovators, partners, speakers and sponsors (including YouHodler SA, PWC, APTOS, Stellar, Deloitte, EY, Cambridge University, and others) who are shaping the future of the financial space, Alexandra Lloyd, Head of AML at YouHodler SA, a swiss-based fintech platform offering seamless services for users between crypto and fiat financial assets, gave a commentary on introducing best practices into compliance departments’ workflows, particularly in the crypto, tech and financial sectors.
Despite many platforms struggling with handling regulatory changes and frameworks being discussed, YouHodler and its team view the entire compliance framework (also defined by laws and regulations, including, for example s such as MiCA, DORA, DAC8, and the Travel Rule) as an essential element and “path” to consider from the start to finish of product design, a foundation on which the platform has been built to foster user trust and business sustainability.
Incorporating compliance into YouHodler’s platform is not just a tick-box exercise, but a design challenge that has been accepted in order to provide the best experiences for Web3 wallets and seamless fiat-crypto services across its platform while retaining and prioritising user-friendly designs.
Although regulatory compliance and usability remain two strong factors for a sustainable fintech platform, how can these two factors be addressed to achieve a better result for its users, as seen on the YouHodler platform?
Why Regulatory Obligations Should Matter to InnovatorsThe Web3 industry is currently undergoing a complete overhaul of applicable regulatory frameworks, making it challenging for many platforms and projects to adapt their designs and products to such complex frameworks.
Compliance regulations and frameworks from the likes of MiCA, DORA, PSD2, ESG, and others. These are not abstract or obscure: when properly implemented, they can improve operational efficiency, build trust with stakeholders, and foster an ethical culture by creating a clear system for managing risks and documenting responsibilities.
Ultimately, a robust compliance framework helps a business navigate complex environments, protect its financial stability, and contribute to a more accountable business environment. compliance regulations or frameworks; they have a direct impact on how design onboarding flows work, manage risk, team structure, and how products are delivered to users.
More often than not, compliance departments have been viewed as restrictive or gatekeepers; however, regulations should be a key aspect of product development, from the very beginning of the onboarding flow to marketing campaigns, reporting systems, and all the other systems in the company. Regulations have specific goals that are important to society; from consumer protection to the prevention of abuse of the financial system by bad actors. Achieving these requirements: user protection, adaptability, compliance obligations, and innovation. Building a Sustainable Platform Around Design Thinking and ComplianceWhen regulatory compliance is considered early in design processes, it eliminates friction and internal tension, fostering resilience and innovation, and provides a structured approach to identifying, assessing, and mitigating compliance risks across the organization, ensuring operations are within defined boundaries. This can be achieved through design thinking, which includes identifying potential user pain points and putting forward mitigations and solutions, following the example of designers in other sectors.
At the heart of design thinking are key factors that must be taken into consideration, including empathy, collaboration, and iteration. With these factors included in the consideration of regulatory obligations, a sustainable and user-friendly platform will be achieved, not only for users, but also for regulators demanding accountability, engineers, legal teams handling evolving regulations, and product managers overseeing complex tasks.
At YouHodler, in order to comply with a complex series of regulations, best practices and technical standards, the company has developed a dedicated compliance team system to manage regulatory requirements, ensuring that regulatory compliance is prioritized, resourced, and integrated into the platform's product designs from the outset.
Overall, The team at YouHodler wants to use compliant product development to build innovative, resilient, flexible, and sustainable systems that give users a better experience.
MiCA, DORA and AI Developments in the Compliance SpaceMiCA and DORA are two highly discussed topics in the crypto space, but DORA’s burden has been underestimated, highlighted Alexandra Lloyd, Head of AML at YouHodler.
DORA sets out requirements for a complex series of policies and procedures intended to achieve high standards of cybersecurity and operational resilience; the technical domain and confidential nature of the subject matter means such documentation is not an easily drafted set of policies.
Rather, it is dozens of pages containing regulatory procedures that in most cases are difficult to outsource, and so genuinely meeting DORA requirements requires cross-team collaboration across multiple different departments. Design thinking can help with clear communication in this process, but key is strong communication of technical concepts by builders and developers.
In a field with so much data, many teams and companies are increasingly turning to artificial intelligence (AI) to solve compliance-related issues: however, AI adoption must be balanced with caution in such a sensitive field, and any decisions taken by agents should be explainable with clear audit trails so that firms can ensure fairness, accountability and transparency.
This is because human oversight remains crucial to help regulatory bodies understand why compliance decisions were made and keep companies accountable to their decisions, a task that AI alone cannot accomplish: artificial intelligence is to be used as assistance or support and not to completely replace human monitoring.
Building a sustainable compliance structure system for the team and platform requires putting the following into consideration: Designing AML onboarding flowing with other types of regulatory compliance in mindReviewing and adjusting a company’s compliance framework to stay current with evolving regulations, ensuring ongoing relevance and effectiveness, is a mustClear data strategy and audit trailsAppropriate consideration of where both AI and automation can increase efficiencyA system built on design thinking and compliance will be more effective and better handle regulatory changes over time, acting in the interests of the platform’s customers.
Industry cooperationNo platform or company can tackle the challenges that come with compliance and regulatory changes on their own, from interpreting ESG obligations to data privacy, tax reporting, and AML; the future of effective compliance remains collaborative.
Shared standards, data frameworks, and industry cooperations like the DARTE roundtables remain a key to unlocking efficient regulatory compliance in order to safeguard customers without being disruptive. At YouHodler, the team collaborates with the MiCA Crypto Alliance, AssoCASP, Crypto Valley Association, and more in order to contribute to ongoing industry-wide discussions.
Compliance and legal advisors are not the enemy; their expertise and input is needed to improve user experiences, build better data flows, and create a sustainable platform that will grow despite changing regulatory policies.
If compliance and design thinking are embraced, as with YouHodler, the future of web3 and innovative ideas will become a compliant building of smarter, user-friendly, and better solutions.
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