Due diligence requirements are the obligations for individuals or organizations to conduct reasonable research and investigation before entering into an agreement or transaction. These requirements ensure a thorough understanding of potential risks, legal obligations, and financial implications. They involve verifying facts and assessing all relevant information to make informed decisions. Adherence to these standards protects parties from unforeseen liabilities.
Context
In the digital asset space, due diligence requirements are becoming increasingly stringent, particularly for institutional investors, exchanges, and companies launching new tokens. This includes assessing the technical soundness of a blockchain project, the regulatory standing of a digital asset, and the background of its development team. Regulators are placing greater emphasis on comprehensive due diligence to protect consumers and prevent market manipulation. News often highlights failures in due diligence leading to project collapses or regulatory actions.
EU CASPs must immediately integrate EBA guidelines into AML/CFT compliance architecture to ensure transaction tracing and meet the December 30, 2024, enforcement deadline.
This staff relief operationalizes crypto custody for RIAs and RICs, formalizing state-chartered trust companies as qualified custodians under the Custody Rule.
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