{"id":19563,"date":"2023-04-06T20:26:26","date_gmt":"2023-04-06T20:26:26","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/us-treasury-report-warns-of-defis-threat-to-national-security-authors-conclude-fiat-is-used-in-illicit-finance-more-than-crypto-defi-bitcoin-news\/"},"modified":"2023-04-06T20:26:26","modified_gmt":"2023-04-06T20:26:26","slug":"us-treasury-report-warns-of-defis-threat-to-national-security-authors-conclude-fiat-is-used-in-illicit-finance-more-than-crypto-defi-bitcoin-news","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/us-treasury-report-warns-of-defis-threat-to-national-security-authors-conclude-fiat-is-used-in-illicit-finance-more-than-crypto-defi-bitcoin-news\/","title":{"rendered":"US Treasury Report Warns of Defi’s Threat to National Security, Authors Conclude Fiat Is Used in Illicit Finance More Than Crypto \u2013 Defi Bitcoin News"},"content":{"rendered":"

(Originally posted on : Bitcoin News )<\/b>
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The U.S. Treasury has released a 42-page report assessing the risks of decentralized finance (defi). The report states that specific nation-state adversaries, cybercriminals, ransomware attackers, thieves, and scammers are using defi to \u201ctransfer and launder their illicit proceeds.\u201d The Treasury\u2019s report warns that defi could threaten national security and calls for policymakers to increase oversight.<\/strong><\/p>\n

U.S. Treasury Report Assesses Risks Associated With Decentralized Finance<\/h2>\n

The U.S. Treasury released a report<\/a> on April 6, 2023, that assesses the purported risks of defi. \u201cThe risk assessment explores how illicit actors abuse defi services and vulnerabilities unique to defi services to inform efforts to identify and address potential gaps in the United States\u2019 AML\/CFT regulatory, supervisory, and enforcement regimes,\u201d said the national treasury and finance department. The report was written by Treasury officials, including Brian Nelson, the Treasury\u2019s undersecretary for terrorism and financial intelligence.<\/p>\n

\u201cDefi services at present often do not implement AML\/CFT controls or other processes to identify customers, allowing layering of proceeds to take place instantaneously and pseudonymously, using long strings of alphanumeric characters rather than names or other personally identifying information,\u201d the report adds. It also acknowledges that some firms are providing AML\/CFT controls and that onchain surveillance companies exist. However, Nelson and the report\u2019s authors maintain that these controls and monitoring practices \u201cdo not adequately address the identified vulnerabilities on their own.\u201d<\/p>\n

The defi report also discusses how the Treasury intends to strengthen federal oversight and regulatory policies. The authors emphasize that \u201ccentralized virtual asset service providers (VASPs) and industry solutions can partially mitigate some of these vulnerabilities.\u201d The Treasury Department stated that regulations that cover traditional finance should also apply to decentralized finance, and regulators must close specific gaps that cybercriminals, money launderers, and scammers currently exploit. Interestingly, despite the report\u2019s 42-page length, the Treasury report authors conclude by stating that illicit finance \u201cremains a minor portion of the overall virtual asset ecosystem.\u201d<\/p>\n

On page 36 of the report, which covers the conclusion, recommended actions, and posed questions, the researchers emphasize that most nation-state adversaries and cybercriminals do not typically use crypto assets or defi for illicit financing. \u201cMoreover, money laundering, proliferation financing, and terrorist financing most commonly occur using fiat currency or other traditional assets rather than virtual assets,\u201d the report\u2019s authors conclude.<\/p>\n

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\nTags in this story
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alphanumeric characters<\/a>, AML\/CFT<\/a>, conclusion<\/a>, Cryptocurrency<\/a>, cybercriminals<\/a>, decentralized finance<\/a>, DeFi<\/a>, federal oversight<\/a>, fiat currency<\/a>, financial intelligence<\/a>, Gaps<\/a>, illicit financing<\/a>, illicit proceeds<\/a>, industry solutions<\/a>, layering<\/a>, Money Laundering<\/a>, nation-state adversaries<\/a>, National Security<\/a>, onchain surveillance<\/a>, Oversight<\/a>, personally identifying information<\/a>, policymakers<\/a>, proliferation financing<\/a>, ransomware attackers<\/a>, recommended actions<\/a>, Regulation<\/a>, report<\/a>, risks<\/a>, scammers<\/a>, terrorist financing<\/a>, Thieves<\/a>, Traditional Finance<\/a>, US Treasury<\/a>, VASPs<\/a>, virtual assets<\/a>, vulnerabilities<\/a><\/div>\n<\/div>\n

What do you think about the U.S. Treasury report that assesses the purported risks associated with defi? Share your thoughts about this subject in the comments section below.<\/strong><\/em><\/p>\n

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\nJamie Redman <\/h6>\n

\nJamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits<\/b>: Shutterstock, Pixabay, Wiki Commons<\/em><\/p>\n

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