The U.S. Government recently made a 42-page report about decentralized finance (defi). The report says that bad guys like nation-state attackers, cybercriminals, ransomware scammers and thieves use defi to hide their illegal money. The report also warned that defi could cause big problems for national security so they are asking policy makers to check up on what’s going on with these types of transactions more closely.
Examining the Risks of ‘DeFi’
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On April 6, 2023, the U.S. Treasury released a report about risks related to ‘defi’. According to their national treasury and finance department, this risk assessment was written to investigate how bad actors use weaknesses in ‘defi’ services for illegal activities, and also advise on how the government can better prevent it. The report was mainly prepared by Brian Nelson – who is the undersecretary at the Treasury’s Terrorism and Financial Intelligence division.
Some companies that offer financial services don’t use processes to identify the people using their services, meaning money can be sent or received anonymously. This makes it harder for organizations to track the source of funds. Some firms are introducing new ways to have better control over this and there are companies that try to monitor what goes on as well. However, according to some experts, these controls and monitoring do not always work very effectively.
The Treasury Department was discussing about how to make federal rules and regulations stronger. They suggested that companies called VASPs could help reduce risks from illegal activities, including money laundering and scamming. Even though the report was 42 pages long, they ended by saying that these bad activities usually take up only a small part of virtual asset activity.
In their report found on page 36, the researchers point out that most bad guys and criminals don’t use secret money or other fancy financial tools for shady activities. They say it mostly happens when people use regular money given by governments instead of fake digital money.
The U.S Treasury recently released a report about the possible risks of something called ‘defi’. If you have thoughts about this report, let us know by commenting below.