Regulatory risks grow for DeFi as a 'money laundering haven'

Regulatory risks grow for DeFi as a 'money laundering haven'


The rapid growth in decentralized finance and yield farming is likely to attract greater regulatory attention according to a recent report.

A joint research paper by global management consulting firm BCG Platinion and Crypto.com has indicated that the rapid growth in DeFi in 2020 has created the potential for money laundering which will bring it under the radar of regulatory authorities.

Since the beginning of the year, the dollar value of crypto collateral locked across DeFi platforms has increased over 1200% to reach $9 billion according to data provider DeFi Pulse.

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DeFi by design is permissionless and decentralized which means, unlike centralized exchanges, there are no KYC (know your customer) requirements for users. It operates largely beyond the realms of government and regulatory control which raises concerns about illegal access to financial services according to the report.

Commenting on the report in its newsletter, Ciphertrace noted:

“Since DeFi protocols are designed to be permissionless, anyone in any country

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