CFTC says DeFi identity should be a focus of U.S. policy

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The Commodity Futures Trading Commission (CFTC), the U.S. regulator for futures, swaps and options contracts, wants policymakers to consider how to confirm related person to DeFi.

According to the report, policymakers need to identify and prioritize the projects of greatest interest, with a focus on digital identity, know-your-customer (KYC) and anti-money laundering (AML) policies, as well as privacy corrections in DeFi.

Regulators are trying to dispel a perception among participants that DeFi is immune to regulatory scrutiny, particularly due to the use of pseudonyms to hide user identities and its non-public nature. The industry’s concentration makes it difficult to assign responsibility to specific individuals.

“The anonymity and disintermediation offered by most DeFi systems raises serious concerns for policymakers focused on ensuring that anti-money laundering and counter-terrorism financing regimes (AML/CFT) are effective and provide appropriate consumer protections.”

Last June, the CFTC, which is competing with the U.S. Securities and Exchange Commission (SEC) to become the primary regulator of the cryptocurrency industry, won a lawsuit accusing the autonomous organization of being unfocused. Ooki DAO provides unregistered products.As of September, the CFTC has sued three companies Some of the most important DeFi protocols were built to offer illegal derivatives trading. These companies are responsible for paying the fees.

Christy Goldsmith Romero, one of the five CFTC commissioners and sponsor of the CFTC Technical Advisory Committee, said:

“The main concern about DeFi systems is the shortage boundary Clear responsibilities and accountability”.

“DeFi does not have a clear roadmap to ensure recourse for victims, prevent illegal mining, or the ability to introduce necessary changes and controls during times of crisis and stress. Straightforward”.

The Financial Crimes Network (FinCEN) is also looking for ways to identify individuals active in decentralized finance and last week launched a beneficial ownership reporting system that requires many companies operating in the United States to indicate who directly or indirectly owns or controls them.

“In just one week, we received over 100,000 applications,” Yellen said at a private event on Monday.