A new Treasury assessment highlights the risks and vulnerabilities associated with DeFi services.
On April 6, 2023, the U.S. Department of the Treasury (Treasury) published a new risk assessment, “Illicit Finance Risk Assessment of Decentralized Finance,” which outlines risks associated with decentralized finance (DeFi). DeFi services use blockchain technology to facilitate financial services without the need for intermediaries, resulting in innovative means for individuals to transact with one another.
The assessment analyzes the risks and vulnerabilities associated with DeFi services and addresses how illicit actors are attempting to exploit the regulatory gaps, governance structures, and noncompliance of these services through means of money laundering, fraud, theft, and more. Following are key takeaways from the assessment.