BlackRock’s Bitcoin ETF crossed $50 billion in assets under management faster than any ETF in history. Behind that milestone sits a less visible story: the due diligence infrastructure that made institutional crypto adoption possible in the first place.
Traditional finance runs on know-your-counterparty frameworks built over decades—credit checks, audited financials, regulatory filings. Crypto offered none of that. For years, institutional allocators stayed on the sidelines not because they doubted Bitcoin’s thesis, but because they couldn’t answer basic questions: Where did these assets come from? Who else holds exposure to this counterparty? What happens if an exchange fails?
The answer, increasingly, is blockchain intelligence.
The transparency problem traditional finance never had to solve
In equity markets, counterparty risk is managed through regulated custodians, clearinghouses, and standardized reporting. A pension fund buying Apple stock doesn’t need to investigate whether the shares are “clean”—the system handles that.
Crypto flipped the script. Assets move pseudonymously across global venues, often through intermediaries with murky compliance histories. The collapses of FTX, Celsius, and Three Arrows Capital in 2022 proved that even sophisticated investors had blind spots. Funds with rigorous traditional due diligence processes discovered they’d been exposed to commingled assets, undisclosed liabilities, and counterparties operating across jurisdictions with minimal oversight.
The irony is that blockchain’s core feature—a permanent, public transaction record—contains exactly the information needed for due diligence. The challenge was making that data legible.
From raw ledger to institutional-grade intelligence
Blockchain intelligence platforms emerged to bridge this gap. By combining on-chain data with entity attribution—linking anonymous wallet addresses to known institutions, exchanges, and individuals—these tools transformed the public ledger into something closer to a Bloomberg terminal for crypto.
Arkham’s blockchain intelligence platform represents this shift. The platform maintains a continuously updated database of labeled wallets, allowing compliance teams to trace asset flows, identify counterparty exposures, and flag transactions involving sanctioned entities or known bad actors. When an institution evaluates a new crypto custodian or OTC desk, they can now examine that entity’s on-chain footprint directly.
This capability proved critical during the 2022 contagion. Firms with access to wallet attribution data could see, in real time, which exchanges were experiencing unusual outflows, which funds had exposure to Alameda Research, and where risk was concentrating across the ecosystem.
How due diligence workflows actually changed
The practical application looks different depending on the institution.
For asset managers, blockchain intelligence has become part of pre-trade compliance. Before executing a large OTC transaction, teams verify that the counterparty’s wallets don’t show patterns associated with mixer usage, sanctioned jurisdictions, or prior involvement in hacks. What once required days of manual investigation now happens in minutes.
For prime brokers and lenders, the tools enable ongoing monitoring. Rather than relying solely on periodic financial disclosures, risk teams can observe collateral movements in real time. If a borrower starts moving significant assets off-platform, the alert surfaces immediately. Increasingly, these teams route trades through venues that integrate analytics directly into execution—platforms like Arkham Exchange that combine intelligence and trading infrastructure, allowing risk assessment and order placement within the same workflow.
Corporate treasury teams evaluating Bitcoin allocations use the same infrastructure differently—verifying that prospective custodians haven’t received funds from flagged sources and benchmarking their security practices against peers.
Data from Arkham on institutional wallet activity now feeds into these workflows at major financial institutions, providing the kind of counterparty visibility that traditional finance took for granted but crypto previously lacked.
The regulatory tailwind
Regulators noticed. The EU’s Markets in Crypto-Assets (MiCA) framework and the proposed U.S. GENIUS Act both emphasize transaction monitoring, counterparty verification, and the ability to trace asset origins. Compliance isn’t optional anymore—it’s table stakes for any institution touching digital assets.
This regulatory pressure accelerated adoption of blockchain intelligence tools. Firms that once viewed on-chain analytics as a nice-to-have now treat it as core infrastructure, on par with traditional AML systems.
The platforms themselves have responded by integrating intelligence directly into execution. Arkham operates both Arkham Intel, a blockchain intelligence platform that deanonymizes wallets and transactions, and Arkham Exchange, a transparency‑first, fully backed crypto exchange offering spot and perpetuals trading. Institutional users can move from analysis to execution within a single environment: monitoring how major funds, whales, and institutions are positioned on Arkham Intel, then adjusting spot or perp exposure through Arkham Exchange when the data supports a trade. If you can see where assets are moving and who’s moving them, you can make faster, better‑informed risk and trading decisions.
What comes next
The institutionalization of crypto due diligence is still early. Most traditional financial institutions are building these capabilities now, not operating them at scale. But the direction is clear.
Within 24 months, blockchain intelligence will likely be as standard in institutional crypto operations as credit ratings are in fixed income. The firms that built these muscles early—during the chaos of 2022 and the rebuilding of 2023-2024—now have a structural advantage as larger allocators enter the market.
The public ledger was always supposed to be a feature, not a bug. It just took a few years—and a few spectacular failures—for institutions to build the tools to use it.
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