When times are tough — as in the pandemic — enterprising human nature goes into overdrive. People seek out alternative ways to make money. That could be one of the reasons why cryptocurrencies skyrocketed in popularity in the last few years, driven in part by large numbers of people sitting at home wondering how to beat low-interest rates and rising inflation.

Where there’s cash, however, there are also criminals. Bad actors are experts in human behavior and see building momentum and increased crypto traffic as a huge opportunity, knowing that many newer investors may not do their homework. Investors might not apply the same level of scrutiny to crypto as they would their pensions or other investments, and there’s not a lot of regulatory oversight globally. So, a simple splash page or message on a forum can quickly lead a lot of new investors to fall into scams.

We’ve also seen an increased proliferation of scams connected to the pandemic such as pretending to sell fraudulent medicines, vaccines or testing, or offer business loans and grants, for instance, have a crypto element, and law enforcement is having to turn on a dime to react to these new threats. That, in turn, creates a growing headache for policymakers tasked with protecting consumers. We also hear loud and clear from the crypto industry that regulation often feels behind the curve and not fit for purpose.

What’s needed is better education. Better education at every level, from teaching and educating law enforcement to policymakers and regulators. Knowledge sharing across the crypto ecosystem to support investigations. And, the resources and appetite for creating smarter regulation that will both protect consumers and give the industry the clarity it needs to continue to innovate and flourish.

Related: Mass adoption of blockchain tech is possible, and education is the key

A fresh approach to law enforcement

Centuries-old investigative methods need more than adaptation to meet the demands of a crime involving digital assets. As new types of crime emerge, the crypto industry has a duty to educate every member of law enforcement about this new world and fast. Crypto’s main “players” tend to be young digital natives compared to law enforcement. Worldwide, the vast majority of officers may find crypto very foreign, intimidating or puzzling, making them somewhat resistant to the technology. This has its impacts, as law enforcement is often first at crime scenes, collecting evidence on a search warrant. But, would they know how to look for a Bitcoin wallet, for instance? If you don’t understand the crime, how can you police it?

After education, the biggest struggle is resources. In the United States, crypto crime is viewed as a subset of cybercrimes like ransomware. By specifically resourcing crypto, investigators can take advantage of its benefits in uncovering the immutable proof of transactions stored on the blockchain, but often the resources and knowledge sit with Federal law enforcement. This means that local crypto-related crimes are taken out of local law enforcement’s hands, creating a huge backlog at the Federal level.

Related: The US plan to monitor illegal crypto activities more sufficiently

In the United Kingdom, law enforcement is catching up to crypto crime. A quarter of U.K. police forces have played a part in seizing $450 million, or around £322 at the time of writing, in cryptocurrency in the last five years. Diving deeper into the numbers, we can see that 99.9% of seizures are Bitcoin (BTC), suggesting that police are able to easily trace illegal activity using public blockchains but face problems tracking privacy coins like Monero (XMR) and Dash (DASH).

Greater Manchester Police say that U.K. police forces are “just getting their heads around” the technology behind crypto; they are recruiting civilian staff with relevant experience to train detectives. And, forces face an additional legal hurdle when seizing cryptocurrency since it is classified as property, not cash, under the Proceeds of Crime Act.

Related: In defense of crypto: Why digital currencies deserve a better reputation

When we talk about crypto, law enforcement is starting to move beyond rug pulls and Silk Road to grasp its huge potential in helping to solve a crime by opening up tools for investigators to trace the movement of money globally. In the U.K., Her Majesty’s Revenue and Customs (HMRC) seized three nonfungible tokens (NFTs) associated with suspected tax evasion, serving as a warning to those looking to conceal money from the authorities.

Reducing the “lag” in new regulation

Regulators are primarily concerned with protecting consumers, and it’s clear that they’re struggling to keep pace with a quickly evolving industry. Regulation exists but feels piecemeal. We will see more regulation coming this year out of consultations and working groups, the U.K.’s Her Majesty’s Treasury announced financial promotions oversight just recently, but often we hear that the industry sees emerging regulation as decidedly behind the curve.

Regulators are keen to change that perception. In the European Union, for instance, the European Union Council adopted Markets in Crypto Assets (MiCA) framework and the Digital Operational Resilience Act (DORA), which may become law later this year. MiCA provides some clarity on regulating stablecoins, public offerings of crypto assets and licensing virtual asset service providers (VASPs). DORA covers digital operational resilience, ensuring that companies can withstand all types of technological risks.

The U.K.’s Financial Conduct Authority (FCA) is working hard, promising to put more resources into crypto. As a result, more firms are getting approval. Jurisdictions like Switzerland and Singapore are seen as the standard-bearers for regulatory frameworks that are clear and mature, where crypto businesses have clarity about their position, can adjust and are able to flourish.

Related: The new HM Treasury regulations: The good, the bad and the ugly

Blockchain and behavioral monitoring tools are growing in popularity because crypto firms see improving compliance processes (and their relationship with regulators) as key to growing adoption. As a whole, where we see regulatory clarity, we see increasing efforts made by the industry to enhance compliance and boost adoption, fuelling the economy in that region and furthering innovation for the entire market. It might be tempting to see the crypto industry as at war with its regulators, but I’d characterize it not as adversarial but as symbiotic. Improving standards, if done well and in collaboration, stands to benefit everyone.

Take a seat at the table

There’s much to be gained from inviting private blockchains, governments, exchanges and VASPs to the same table. Knowledge sharing across the ecosystem, particularly when it comes to behavioral data and new criminal typologies, could unlock criminal investigations as well as enable better-conceived regulation and consumer protections. It’s a balancing act.

Related: FATF includes DeFi in guidance for crypto service providers

A growing number of businesses are approaching us, wanting to do the right thing beyond meeting the current regulatory requirements. By enhancing compliance and implementing best practices, the sector can mature, ensuring that crypto businesses operate safely, investors are protected and inching the door open to institutional investors.

In a world where you can create thousands of new addresses a day, blacklists simply can’t keep up. That’s where behavioral analysis comes in to supplement more traditional sources of information so businesses can make informed decisions about how to act.

Related: Bitcoin can’t be viewed as an untraceable ‘crime coin’ anymore

Education will make crypto finally come of age

Crypto can’t become conventional without wider awareness and understanding. The industry tells us that governments and regulators always seem six steps behind when trying to restore control over chaos rather than taking a longer-term and less myopic view on policymaking. That was a big part of my role at the FBI, helping law enforcement to have even a basic understanding of crypto. And, we’re still battling for better education. We have been lending our expertise to help regulators and governments get up to speed on that shifting and rapidly innovating industry to create relevant and effective policy. Because without awareness, knowledge and understanding, crypto may be widely known for crime over legitimacy for some time to come.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.