Risk Management in Blockchain Finance BFC Practice Questions (Page 3)

Questions 11–15

1. 11application · medium

   A cryptocurrency exchange is expanding into a new jurisdiction that requires strict AML/KYC compliance. The exchange uses a decentralized identity solution to verify customers. However, the regulator requires that the exchange be able to freeze funds of suspicious accounts. Which approach BEST balances the regulatory requirement with the decentralized identity model?

   • AKeep all customer data on-chain to ensure transparency and allow regulators to audit transactions directly.
   • BImplement a centralized compliance layer that can freeze funds while preserving the decentralized identity for customer authentication.
   • CUse a smart contract that automatically freezes any account flagged by the decentralized identity system.
   • DRefuse to operate in the jurisdiction because decentralized identity is incompatible with AML/KYC.
   Reveal Solution Discussion Select an answer first
2. 12foundation · easy

   In blockchain finance, which regulatory requirement is designed to prevent money laundering by requiring financial institutions to verify the identity of their customers?

   • APayment Card Industry Data Security Standard (PCI DSS)
   • BBasel III
   • CGeneral Data Protection Regulation (GDPR)
   • DKnow Your Customer (KYC)
   Reveal Solution Discussion Select an answer first
4. 13expert · hard

   A blockchain-based cross-border payment system uses a proof-of-stake (PoS) consensus mechanism. The system processes high-value transactions. The operations team has identified a risk: if a validator set is compromised, the network could finalize fraudulent transactions. They are considering mitigation options. Which option BEST balances security and operational efficiency?

   • ARequire multiple validators to sign off on transactions above a certain threshold, using a multi-signature scheme.
   • BUse a centralized authority to approve all transactions.
   • CImplement a time-lock on all transactions to allow for manual review.
   • DIncrease the number of validators to make it harder for an attacker to control the network.
   Reveal Solution Discussion Select an answer first
5. 14foundation · easy

   In risk assessment for blockchain finance, which method assigns a numerical value to the likelihood and impact of a risk to calculate a risk score?

   • AScenario analysis
   • BQualitative risk assessment
   • CQuantitative risk assessment
   • DSWOT analysis
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6. 15application · medium

   A consortium of banks operates a permissioned blockchain for interbank settlements. They are designing the governance structure to manage operational risks. Which governance model would BEST reduce the risk of a single entity having excessive control?

   • AAllow the founding bank to have veto power over all major decisions.
   • BOutsource all governance decisions to a third-party auditor.
   • CEstablish a multi-party governance committee with representatives from each member bank.
   • DUse a rotating chairperson who makes all decisions for a fixed term.
   Reveal Solution Discussion Select an answer first