US Treasury Considers Digital ID Verification in DeFi to Combat Illicit Finance

The United States Treasury is exploring the potential implementation of a digital identity verification system within the decentralized finance (DeFi) sector to address illicit financing activities. This proposal involves utilizing digital solutions to ensure user compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations. This approach aims to strike a balance between fostering innovation in financial technology and safeguarding the financial system from potential risks. The matter is expected to generate significant discussion among industry experts and policymakers regarding the optimal methods for regulating this emerging sector while upholding its fundamental principles.