Building Trust in the New Era of Digital Currencies

Digital currencies, from central bank digital currencies (CBDCs) to stablecoins to cryptocurrencies, are rising, enabling faster and more inclusive transactions. Data from Juniper Research predicts that digital currency transactions will reach $213 million by 2030.¹

Their rise is driven by declining cash use,² the push for financial inclusion, and the need for more efficient domestic and cross-border payments. Central banks are exploring CBDCs to ensure stability and respond to the growth of private digital assets.

While this shift offers opportunities for real-time global economic activity, it also raises a critical challenge: how do you make an instant, borderless payment system safe and trustworthy? For digital currencies to reach their potential, trust must be built into the foundation from day one through intelligent systems that detect fraud, enforce compliance, and quickly adapt to new risks.

Key Takeaways

• Digital currency methods (e.g., CBDCs, cryptocurrencies, and stablecoins) offer promise to deliver efficient domestic and cross-border payments and increase financial inclusion.
• However, they also face hurdles due to inconsistent global regulations, limited historical data, and uncertainty among central banks and potential users.
• To ensure greater adoption, digital currencies require adaptive, intelligence-driven defenses to provide a unified view across borders and identify new fraud threats immediately. 
• Feedzai tackles the digital currency challenge with an end-to-end AI-native approach that is future-ready, focusing on systemic trust and fraud and scam mitigation.

Digital Currencies and the Dangers of the Unknown

While the shift to digital currencies offers opportunities, it also poses significant challenges for financial institutions, central banks, and payment providers responsible for maintaining the security of the financial ecosystem. 

Regulation Uncertainty

The fragmented regulatory environment makes it difficult for banks that aim to manage and offer digital currency services. Even with global standards, such as the FATF Travel Rule, which requires collecting and sharing originator and beneficiary information, there are inconsistencies across countries (e.g., data requirements and thresholds). These issues prevent banks and end users from seizing the benefits of digital currencies, especially in cross-border transactions. Additionally, there is no clearly defined liability for fraud on a digital currency network, which creates financial risks and fuels skepticism among end users.

Exposure to Fraud Powered by Visibility Gaps

New payment channels present significant challenges to traditional fraud detection methods, which depend on extensive historical transaction data to define normal behavior, a baseline that these channels have yet to establish. Rule-based systems are too rigid to keep up with the evolving tactics associated with emerging payment methods. The speed and cross-border nature of modern transactions further increase exposure, enabling sophisticated fraud that’s difficult to detect without shared insights. 

We know that fraudsters quickly find ways to exploit any new payment channels. When instant payment systems were first introduced, criminals tested and exploited weaknesses before institutions could fully adapt. Digital currencies are likely to follow the same pattern.

The Challenge Behind Trust and Adoption

The rise of non-sovereign digital currencies risks creating anxiety across the ecosystem. Central banks worry about monetary control, financial institutions face new fraud and operational risks, and everyday users remain hesitant because they don’t yet trust the safety of these new rails. There are clear parallels here to when mobile banking first emerged. Users didn’t immediately adopt it because it was convenient; they only adopted it once they believed it was secure. Features like biometrics and device binding didn’t just improve security; they created confidence from both the consumer’s and the bank’s perspectives.

“Digital currencies hold significant promise to help unbanked populations, bolster a nation or region’s local economy, and promote economic independence. However, transactions must remain secure across all possible channels for customers and citizens to realize the full benefits of these currencies.” — Bob van Heumen, Senior Manager, Feedzai

Demystifying Digital Currencies

Change can be intimidating. As a result, new payment methods such as digital currencies often face skepticism. Many assume they make fraud easier, but public blockchains are immutable, making money flows traceable even between custodial and non-custodial wallets. While wallet owners are hidden, transactions can still be traced.

Meanwhile, tracing fiat transaction activity across borders is harder due to differing regulations, limited data sharing, and the domestic nature of most payment networks. Digital currencies’ public ledgers allow easier, even international, analysis. Plus, converting them to fiat requires regulated exchanges that monitor transactions for unusual or high-risk activity, reducing the risk of money laundering.

New Currencies Call for Innovative Protection

Traditional fraud prevention systems rely on static rules and AI that depends entirely on historical patterns for analysis. In other words, they are tools built for known risks, not the new world of digital currencies. These systems often struggle to adapt to evolving threats, creating gaps when new fraud tactics emerge.

The problem is made worse by fragmentation. Most financial institutions still monitor activity in silos: digital in one system, card activity in another, etc. This creates blind spots at the moment criminals will exploit cross-channel pathways, moving value on-ledger and off-ledger in ways legacy tools can’t connect.

To make digital currencies safe and scalable, the industry needs to consider a new foundation of a unified view of customer activity that spans both traditional payment rails and blockchain networks. This means linking identity, behavioral signals, and transaction patterns across a single customer view. 

How Feedzai Secures the Digital Currency Ecosystem

Feedzai tackles the digital currency challenge with an end-to-end AI-native approach that is future-ready and focused on systemic trust.

Real-Time AI Protection

Digital currency transactions occur instantly, and Feedzai’s fraud protection capabilities can match their pace. Advanced AI instantly evaluates each transaction to quickly detect suspicious activity, allowing institutions to act before losses occur. This avoids unnecessary customer friction that could jeopardize or slow down digital currency adoption.

Protection Across Every Payment Channel

Digital currencies operate across many different channels and rails. Feedzai works independently of payment methods and channels, namely on wallets, ensuring consistent risk management and fraud prevention.

Network Intelligence That Enables Smarter, Tailored Decisions

The risk strategy can be initiated using Feedzai’s network intelligence. This intelligence, built on insights from the existing Feedzai community, detects patterns and risks that could otherwise go unnoticed, allowing you to protect digital currencies with AI models from day one, without the need for historical data. The strategy can then evolve as more historical data becomes available and custom models are trained.

Explainable, Privacy-First Decisioning

Every decision Feedzai makes is fully explainable, ensuring that financial institutions can understand why a transaction is approved or flagged, building trust and confidence while protecting sensitive data.

Enriched Data for Full Visibility Over Risk

Feedzai goes beyond just looking at traditional transactional signals by integrating behavioral biometrics, device and network intelligence, and orchestrating additional third-party data where necessary. By continuously monitoring wallet enrollment and payment activity and comparing it with users’ typical patterns, Feedzai can detect unusual events, locations, or login times, helping prevent account takeover and scams. This enriched view reduces false positives, improves accuracy, and delivers a more secure, seamless experience for customers.

Unified Insights for Omnichannel Protection

By being payment agnostic and omnichannel-oriented, Feedzai can create a single view of customer risk across fiat and digital currencies. Cross-channel rules and AI-driven models link both payments to spot unusual patterns and potential fraud in real time, giving institutions a holistic picture of user activity.

Scalable Security for Growing Operations

Feedzai is built on a modern, resilient architecture that scales effortlessly. Whether handling thousands or millions of transactions, institutions can maintain high performance and reliable security without compromise.

How Feedzai Builds Trust in Your Digital Currency

Digital currencies introduce new opportunities and risks. Financial institutions need partners who know how to secure complex, fast-moving payment ecosystems at scale. With years of experience protecting over a billion consumers, providing real-time fraud prevention for global networks, and supporting major payment initiatives alongside partners such as Mastercard and leading banks worldwide, Feedzai is uniquely equipped to protect the next wave of financial innovation. Extending our protection to digital currencies was simply the next logical step in our mission to make every transaction, in every channel, safer and more trusted.

Additional Resources

• Blog: What Is Digital Currency? Types, Risks, and How to Protect Yourself
• Report: Extracting Business Value from External Data
• Solution Sheet: Secure Digital Currency Transactions
• Solution: RiskOps. Unify All Risk Signals to Stop FinCrime.