Source: https://www.linkedin.com/feed/update/urn%3Ali%3Ashare%3A7049780762820186112
The Wall Street Journal #DeFi #Crypto #National #Security #Threat: #US #Treasury: #Decentralized #Cryptocurrency #Markets #Threaten U.S. #National #Security: https://lnkd.in/giYYiZa7 :
Says U.S. Department of the Treasury: #DeFi Poses #National #Security #Risk: https://lnkd.in/gunNEbjs : Releases 2023 #DeFi #Illicit #Finance #Risk #Assessment:
Click here to read “Illicit Finance #RiskAssessment of #DecentralizedFinance”: PDF Report: https://lnkd.in/gXMTKJaw :
This risk assessment explores how #illicit #actors are #abusing what is commonly referred to as decentralized finance (#DeFi) services as well as #vulnerabilities unique to DeFi services. The #findings will inform efforts to identify and address potential gaps in the United States’ anti-money laundering #AML and #countering the #financing of #terrorism #CFT (AML/CFT) #regulatory, #supervisory, and #enforcement regimes for DeFi. The term “decentralized” broadly refers to #virtual #asset #protocols and services that purport to allow for some form of automated peer-to-peer (#P2P) transactions, often through the use of self-executing code known as “#smartcontracts” based on #blockchain technology. The degree to which a purported DeFi service is in reality decentralized is a matter of facts and circumstances, and this risk assessment finds that DeFi services often have a #controlling #organization that provides a measure of #centralized #administration and #governance.
The assessment finds that illicit actors, including #ransomware #cybercriminals, #thieves, #scammers, and Democratic People’s Republic of Korea (#DPRK) #cyber #actors, are using #DeFi services in the process of #transferring and #laundering their illicit proceeds. To accomplish this, illicit actors are #exploiting #vulnerabilities in the U.S. and foreign AML/CFT #regulatory, #supervisory, and #enforcement regimes as well as the #technology underpinning #DeFi #services. In particular, this assessment finds that the most significant current illicit finance risk in this domain is from DeFi services that are not compliant with existing AML/CFT obligations.
In some cases, industry providers may purposefully seek to decentralize a virtual asset service in an attempt to avoid triggering AML/CFT obligations, without recognizing that the obligations still apply so long as the provider continues to offer covered services. At the same time, some DeFi services developed with opaque organization structure may present critical challenges to supervision and, for cases in which DeFi services are not complying with their AML/CFT obligations, enforcement of applicable #statutory and #regulatory obligations.
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