US Treasury warns about cryptocurrencies in its latest report

The US Treasury Department has issued a warning about the risks posed by decentralized cryptocurrency markets, known as DeFi, to national security. The Treasury released a 42-page report titled, ‘Illicit Finance Risk Assessment of Decentralized Finance’ on Thursday. The report highlights that these platforms enable cryptocurrency investors to transact with each other without a central intermediary overseeing transactions, making it difficult for regulators to monitor DeFi transactions.

It states that the opaqueness of the market has been exploited by illicit actors, including criminals, scammers, and North Korean cyber actors, to launder illicit funds and finance their operations. The report recommends that the federal government needs to bolster its existing supervision and enforcement of the market by requiring platforms to adhere to the same anti-money-laundering rules that banks and other financial institutions must follow.

The report also recommends that federal agencies expand their regulatory powers and work with other governments to establish international standards. The private sector is advised to use the findings to inform their own risk mitigation strategies and take steps to

prevent illicit actors from abusing DeFi services. Failure to establish sufficient vetting policies may result in enforcement action.

The Treasury Department plans to bring the market under greater federal oversight, including requiring platforms to adhere to anti-money-laundering rules similar to those that banks and other financial institutions must follow.

In a recent U.N. security council annual report, it has been revealed that North Korea stole crypto assets worth more than one billion dollars. This report is in line with the U.S. Treasury secretary, Janet Yellen, statement of last year where she showed her apprehensions about cryptocurrencies and the need for better oversight.