Treasury Department Can ’t Help but Recognize DeFi Is Unique

Jack Solowey andJennifer J. SchulpYesterday, the Treasury Department released anIllicit Finance Risk Assessment of Decentralized Finance (DeFi). Looking past the report ’s, frankly half‐​hearted, fear mongering and skepticism that disintermediated financial toolsdeserve different regulatory treatment than financial intermediaries, the report makes important acknowledgements that DeFi ’s illicit finance risk is relatively small and that DeFi technology is unique. The report’s sparks of recognition that, on some level,DeFi is different from traditional finance —in enabling peer‐​to‐​peer financial transactions and potentially mitigating illicit finance risk through technology—ought to be noted by other U.S. policymakers who activelyapply ill ‐​fitting legacy rules to new tools andexaggerate those tools ’ risks.While the report states that criminals and rogue states exploit DeFi to launder money and carry out cyberattacks endangering national security, it tends to bury the lede with respect to the scope of the problem. Still, Treasury ultimately acknowledges that, all told, crime is a “subset” of overall DeFi activity, which itself is a “minor portion” of crypto activity, and that the crime Treasury is concerned with is mainly a problem of traditional finance:[M]oney laundering, proliferation financing, and terrorist financing most commonly occur using fiat currency or other traditional assets as opposed to virtual assets.Perhaps for this...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs