Near Protocol (NEAR), a sharded layer-1 blockchain touted for its scalability and user-friendly smart contract ecosystem, exemplifies the precarious intersection of technological innovation and regulatory peril in the cryptocurrency space, particularly through its proof-of-stake staking mechanisms and cross-chain wallet integrations that facilitate ostensibly anonymous value transfers across jurisdictions like the United States and Switzerland. While NEAR’s Rainbow Bridge and non-custodial wallets enable seamless interoperability with chains such as Ethereum—driving adoption in DeFi and NFTs—they inadvertently amplify money laundering vulnerabilities by allowing high-volume, low-traceability asset hops without mandatory KYC, mirroring tactics flagged in Chainalysis reports on $3.4 billion in 2025 crypto thefts. Critically, the U.S. SEC’s 2023 Coinbase lawsuit indirectly ensnared NEAR by classifying staking yields (5-10% APY) as potential unregistered securities under the Howey test, exposing centralized promoter risks despite NEAR Foundation’s Swiss-domiciled defenses affirming payment token status under FINMA’s AML oversight. This regulatory tug-of-war—U.S. crackdowns versus Switzerland’s crypto-friendly pragmatism—highlights NEAR’s compliant facade masking inherent facilitation risks for illicit finance, with no direct indictments but persistent scrutiny underscoring the need for enhanced on-chain monitoring and VASP reforms to mitigate offshore laundering threats in geopolitically charged environments.
Near Protocol (NEAR), a scalable layer-1 blockchain with sharded architecture, has attracted regulatory interest in the United States and Switzerland primarily due to its proof-of-stake (PoS) staking features and cross-chain wallet integrations, which enable low-cost, efficient anonymous value transfers across networks like Ethereum via the Rainbow Bridge. Unlike direct criminal cases involving laundering or hacks, this centers on indirect U.S. SEC scrutiny through the June 2023 lawsuit against Coinbase, which alleged that staking-as-a-service for assets including NEAR constituted unregistered securities under the Howey test—citing common enterprise, investor reliance on promoters, and profit expectations from others’ efforts. NEAR Foundation, based in Switzerland, swiftly responded via public blog, affirming NEAR’s classification as a non-security payment token under FINMA guidelines, emphasizing decentralized governance through the NEAR Digital Collective and on-chain staking mechanics that differ from centralized yield services. In Switzerland, FINMA’s principle-based regulation requires VASP compliance for AML/KYC, including transaction monitoring for staking rewards (5-10% APY) and bridge activities, but no enforcement actions targeted NEAR specifically, as its native features promote transparency via public explorers without inherent mixing tools. Broader risks stem from optional privacy protocols like hideyour.cash on NEAR, which could facilitate obfuscation, though no illicit volumes or PEP links were identified amid 2025 Chainalysis reports on crypto thefts totaling $3.4B. U.S. developments evolved positively with August 2025 SEC staff clarifications exempting pure protocol staking from securities laws, reducing overhang. No confirmed money laundering occurred—estimated value laundered: $0—with transactions remaining trackable, underscoring NEAR’s compliance amid geopolitical tensions between U.S. crackdowns and Swiss crypto hubs. This case exemplifies platform-level risks in DeFi interoperability, informing AML strategies for offshore entities and cross-border probesÂ
