A report issues by the US regulatory body recommends specific actions applied to anti-money laundering and digital identity in the opaque world of DeFi.The publication of the report follows a study conducted the Department of Treasury on illicit finance risks in DeFi which found that North Korea, cybercriminals, ransomware attackers, thieves, and scammers are using DeFi services to transfer and launder their illicit proceeds. The Government recommended that federal regulators take clear steps, in line with AML/CFT regulations and sanctions obligations, to prevent illicit actors from abusing DeFi. A central concern related to DeFi systems is the lack of, and some industry designs to avoid, clear lines of responsibility and accountability, states CFTC commissoner Christy Goldsmith Romero "This feature of DeFi systems may present the clearest ways in which DeFi poses risks to consumers and investors, as well as to financial stability, market integrity and illicit finance—it implicates no clear route to ensuring victim recourse, defense against illicit exploitation, or the ability to insert necessary changes and controls during periods of crisis and network stress," she says. "Given the potential risks, the report finds that government and industry should take timely action to work together, across regulatory and other strategic initiatives, to better understand DeFi."The report recommends evaluating options for regulating and imposing requirements for identity information discoverability and verification across layers in the ecosystem. This could involve regulating more centralized identity information and credential repositories and service providers, and determining what level of identity information must be collected by different financial actors at different layers of the DeFi stack.