Three Years In: Building Compliance for Regulated Onchain Finance

Financial institutions and fintechs are increasingly issuing digital assets and launching tokenized products. Predicate was started three years ago with this in sight and a simple thesis: provide the necessary compliance stack for regulated markets to move onchain. At the time, compliance for digital assets largely meant anti-money laundering (AML) wallet screening at the browser level. However, businesses building digital asset products and operating in traditional markets require a more comprehensive approach to compliance — one that meets regulatory standards across jurisdictions. At Predicate, we set out to build an end-to-end compliance platform for digital assets to make sure we solved this fundamental problem.

The reality of regulated onchain finance today

Connecting regulated financial products to blockchain-based environments is no small feat. As institutions launch tokenized assets, their compliance obligations follow those assets around the clock and across jurisdictions. For financial institutions and fintechs, these obligations are crucial to scale the business and drive customer trust, but also avoid major fines and loss of licenses. Compliance failures, like those of Bank of America ($1.2B+ fine), American Express ($350M fine), and Wise (OCC charter rejected), result in significant financial losses and reputational damage.

Digital asset compliance is a particularly thorny problem because blockchains are programmable, settlement is near real-time, and capital moves globally. Onchain financial products operating at global scale need compliance enforcement systems that:

• Function around the clock in real-time 

• Are secure from malicious actors including nation-state actors

• Are easy to implement without hindering user experience 

Most organizations are not equipped to architect and maintain this type of complex compliance infrastructure at scale while also focusing on their core business. 

It is this challenge that energizes us.

“Onchain finance only scales when regulated products can live on it. Predicate empowers clients to do so by enforcing policy in real-time and expanding the surface area of compliant markets for institutions to move capital and enforce rules.” – Derek Gottfrid, Head of Product & Engineering at Paxos, Inc. (Predicate Strategic Investor)

Predicate’s digital assets control platform

Predicate was built based on our experience in digital assets and years of engaging directly with regulators. We've focused that expertise into a single platform that enables organizations to navigate the digital asset space confidently. By working alongside blockchain analytics and risk intelligence providers, we are able to effectively define per-transaction policies and take automated actions that enforce compliance requirements for our customers. Those decisions and actions are enforced directly at the asset contract across both primary and secondary markets.

Primary markets:

When a consumer mints a tokenized asset or deposits into a vault, Predicate screens the transaction before it settles. That check covers identity verification, AML/CFT screening, and wallet attribution, so the business knows who is behind each wallet it accepts. For permissioned assets like tokenized funds and securities, approved wallets are added to the asset's allowlist and kept current as investors are approved or removed.

Secondary markets: 

Once an asset is issued, the issuer’s compliance obligations continue for as long as the asset is in circulation. Predicate monitors holders against sanctions lists across multiple jurisdictions and updates in real-time, knocking hours off the typical response time to relevant sanctions designations. We also monitor ongoing risk signals and work with leading threat intelligence providers to spot instances of money laundering and exploits early. When a holder is sanctioned or funds are tied to an exploit, Predicate acts automatically on the issuer’s behalf, freezing those funds before they can move further.

Looking forward: the industry standard for onchain compliance

Digital assets have entered their regulated era. Stablecoin issuers must now navigate OCC charters and compliance requirements in the wake of the GENIUS Act. Financial institutions and fintechs launching tokenized products must adhere to frameworks set by the SEC and CFTC. And all institutions still need to protect themselves from an onslaught of hackers and rogue nation-state actors. In summary, we support these endeavors and give compliance teams the confidence they need to navigate the industry.

“Crypto is no longer just a new asset class — it’s becoming financial infrastructure. That shift fundamentally changes what’s required to manage risk and stay compliant at scale. We saw this begin to emerge over a year ago with the increase of interest in tokenization of real world assets and issuance of digital assets. Since then our conviction has only become stronger. Institutional adoption of blockchain technology is accelerating, and with it, the need for controls strong enough to protect regulated products at scale.” – Yuan Han Li, Partner at Blockchain Capital

We’ve been doing this at scale with companies like MoneyGram, Paxos Labs, Metamask, Plume, Aztec, M0, and more. Since launch, Predicate’s platform has already screened $1B+ in transaction volume, evaluated 6M+ transactions against user policies, and blocked 100K+ non-compliant transactions. Today we're announcing our Series A, led by Blockchain Capital, with participation from our existing investors and from Paxos, Inc. as a new strategic investor, bringing our total raised to $15 million.

Our goal is simple: embed compliance into every regulated digital asset to ensure a more robust and global financial system than the one we use today.

If you’re building regulated onchain financial products, or the infrastructure that supports them, we’d love to connect. Reach out to see Predicate in action.