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7th April 2023 - DeFi and the US Treasury.


A U.S Treasury report on DeFi (Decentralised Finance) is likely to be wilfully misinterpreted by some people.

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With the next halving (when BTC rewards per block will be reduced from 6.5 to 3.25) due on 26th March 2024 now in sight, crypto investors are very aware that every previous halving kicked off a dramatic bull run.

Now that this fact is so widely known, and the pool of crypto investors is so much deeper than before, one might expect the bull run – if there is to be one – to start prior to the halving this time, as both retail and institutional investors position themselves in advance.

Occasional Series – Islington Council refute the allegation that they are anti-car warriors

Curious Cryptos’ Commentary – US Treasury report

The U.S. Department of the Treasury has announced the release of a report into DeFi:

It’s a little more specific than that:

“Today the U.S. Department of the Treasury published the 2023 DeFi Illicit Finance Risk Assessment, the first illicit finance risk assessment conducted on decentralized finance (DeFi) in the world. “

A key conclusion is this:

“The assessment finds that illicit actors, including ransomware cybercriminals, thieves, scammers, and Democratic People’s Republic of Korea (DPRK) cyber actors, are using DeFi services in the process of transferring and laundering their illicit proceeds.

… this assessment finds that the most significant current illicit finance risk in this domain is from DeFi services that are not compliant with existing AML/CFT obligations.”

I think we all knew that already.

Crypto naysayers will jump on this report demanding stricter regulations, and no doubt some bans thrown in for good measure, but they have it all wrong.

Gary Gensler, Chair of the SEC (Securities and Exchange Commission) believes there is appropriate regulation in place, which he has been furiously enforcing against those who do not take compliance seriously. For those that do, for example Freeport (see CCC 2nd April 2023), there is a means of gaining registration with the SEC. Simply driving legitimate crypto business offshore just leads to less compliance, not more.

“There’s nothing incompatible in the crypto mkts w/ the securities laws. A goal of our work at the SEC is to bring this field into compliance. That way, investors get the same time-tested protections they get elsewhere in the markets.”

Tucked away at the end of this report is this statement, which the naysayers do not want to be publicised:

“This report recognizes, however, that illicit activity is a subset of overall activity within the DeFi space and, at present, the DeFi space remains a minor portion of the overall virtual asset ecosystem. Moreover, money laundering, proliferation financing, and terrorist financing most commonly occur using fiat currency or other traditional assets as opposed to virtual assets.”

Stick that in your pipe and smoke it, Senator Elizabeth Warren.

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