DeFi Needs to Comply With Anti-Money Laundering Rules, US Treasury Says

Treasury gives guidance on transactions like virtual currency
Companies told to take ‘clear steps’ in line with regulations

The U.S. Treasury building stands in Washington, D.C., U.S., on Thursday, April 16, 2020. President Donald Trump threatened Wednesday to try to force both houses of Congress to adjourn -- an unprecedented move that would likely raise a constitutional challenge -- so that he can make appointments to government jobs without Senate approval.Photographer: Al Drago/Bloomberg

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By Daniel Flatley

April 6, 2023 at 2:04 PM UTC

Updated on

April 6, 2023 at 4:12 PM UTC

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Decentralized financial transactions, including those done with virtual currencies, need to comply with anti-money laundering and sanctions laws, the US Treasury Department said in a new report.

The 39-page report, which was commissioned by the Biden administration, concludes there are several risks associated with DeFi technology, which has no exact definition but includes self-executing transactions between two or more people based on the same blockchain technology that underpins cryptocurrencies. Those risks include abuse by “ransomware cybercriminals, thieves, scammers, and Democratic People’s Republic of Korea (DPRK) cyber actors,” according to Treasury.