FinCEN Cracks Down On DeFi


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The US Financial Crimes Enforcement Network (FinCEN) is considering adopting stricter measures for decentralized finance (DeFi) to combat financial crimes. FinCEN’s evaluation of its anti-money laundering and counter-terrorism financing frameworks is a result of an executive order issued by US President Joe Biden on March 9, 2021, on ensuring the responsible development of digital assets.

As noted by the agency’s director, Himamauli Das, the agency is taking a closer look at its anti-money laundering and counter-terrorism financing framework for cryptocurrencies and digital assets to determine if additional regulations or guidance are necessary. The regulator is particularly concerned with the potential for DeFi to reduce or eliminate the role of financial intermediaries in areas of anti-money laundering and counter-terrorism financing, and has welcomed feedback from industries and banking communities.

Das noted that “DeFi will continue to impact the financial services industry” and the agency will need to mitigate the “illicit finance and national security risks posed by the misuse of digital assets.”