July 14, 2024


Technology/Tech News – Get all the latest news on Technology, Gadgets with reviews, prices, features, highlights and specificatio

Is it just me or is the Treasury Department firing warning shots at DeFi?

Is it just me or is the Treasury Department firing warning shots at DeFi?

All kinds of unwanted users – ransomware gangs, thieves, scammers, North Korea – merrily deal in decentralized finance and even money laundering, According to a new report from the Treasury Department. This is because DeFi does not comply with AML and CFT laws.

The Treasury says weak anti-money laundering compliance as well as poor cybersecurity puts DeFi users at risk for theft and fraud.

In the US, the Bank Secrecy Act – and some other regulations – mean that financial institutions have to help the government detect money laundering. In this paper, the Treasury notes that a DeFi service may be a financial institution affiliated with a BSA, even if it is decentralized, and would have to comply with the law. Excuse me! This sounds like a warning shot. If I were in DeFi, I would be worried there would be a crackdown coming; The Treasury is basically saying that DeFi services are at risk under existing laws.

The report found that “many” DeFi services do not comply with the BSA, which is not entirely surprising, you know, the entire history of bitcoin as a currency-based way of hating the government. In some cases, the paper notes, DeFi services deliberately decentralize what they do to try to avoid enforcement of anti-money laundering laws. Unfortunately, the Treasury says, that’s not at all how the law works.

There is a second shot of warning in the paper: it recommends “intensifying interactions with foreign partners to push for stronger enforcement” of anti-money laundering laws, which sounds dire as the US is heavily inclined to other countries where DeFi may be set up.

See also  Asian markets mostly fell as investors weighed Yellen's remarks on banks