A US financial regulator wants to seek input from the banking industry on how decentralized finance (DeFi) might affect the agency’s efforts to curb financial crime.
The Financial Crimes Enforcement Network (FinCEN) stated that it is “taking a careful look” at the DeFi case, while the agency’s acting director, Himamauli Das, stated that the digital asset ecosystem and virtual currencies are a “key priority area” for the agency.
Das delivered a prepared speech on December 6 at the American Bankers Association Conference on Financial Crimes.
The acting director added that the agency is “taking a close look” at its anti-money laundering (AML) and anti-financing of terrorism (CFT) framework for cryptocurrencies and digital assets to decide if “additional regulations or guidance are necessary.”
“We are collaborating with relevant US government stakeholders in this effort,” Das said. “We appreciate the engagement with the industry – including the banking community – to better understand their assessment of vulnerabilities and risks.”
In particular, the regulator expressed concern about the “DeFi’s potential to reduce or eliminate the role of financial intermediaries” which are critical to its efforts to combat money laundering and terrorist financing.
Das said he acknowledges that DeFi “will continue to affect the financial services industry” and that the agency will have to mitigate the “illicit finance and national security risks posed by the misuse of digital assets.”
FinCEN’s assessment of its anti-money laundering and anti-terrorist financing frameworks is part of the Executive Order to Ensure the Responsible Development of Digital Assets Issued by the President of the United States, Joe Biden, on March 9.
One of the results of the Executive Order was the “Action plan to address the risks of illicit financing of digital assets” of the United States Department of the Treasury.
Among other priority measures, the plan recommended greater private sector involvement through “the publication of official documents, discussions, and Treasury programs that enable information sharing between the public and private sectors.”
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