DeFi is called “high risk” in the latest draft anti-money laundering bill of the EU

It is reported that according to the latest version of EU anti-money laundering regulations, the transfer with DeFi may be classified as high-risk. After the European Parliament members meet next week, the text may have more changes.

Interpretation of this information:

The latest version of EU anti-money laundering regulations may have an impact on decentralized finance (DeFi) as transfers via DeFi platforms may be considered high-risk. This information has been reported by several sources, including cryptocurrency news outlets, indicating that the new regulations could have far-reaching implications for the cryptocurrency world. The EU’s original anti-money laundering regulation took effect in 2018 with the aim of combating the use of financial systems for illegal purposes, such as money laundering and terrorist financing.

One potential consequence of the new regulations is that DeFi platforms may be required to implement more robust anti-money laundering measures, like Know Your Customer (KYC) regulations, which would require users to provide identification documentation before transacting. This could be problematic from the perspective of DeFi as the whole point of decentralized systems is that they are supposed to be open and not subject to centralized control.

Another potential impact is that regulators may have to classify DeFi transactions as high-risk, making them subject to additional scrutiny and increasing the costs of doing business in DeFi. This would have a significant impact on the DeFi ecosystem, which is still in its early stages but has already attracted significant investment in recent years.

It is important to note that the new regulations are still in the process of being finalized, and changes may occur after the European Parliament members meet next week. Therefore, it is still unclear exactly how these regulations will impact DeFi and the cryptocurrency industry as a whole.

Overall, the new EU anti-money laundering regulations may have far-reaching implications for DeFi, especially if the platforms are classified as high-risk and subject to additional regulatory scrutiny. This highlights the challenges that regulators face as they try to balance the need for combatting illicit activities with the desire to promote innovation in the fast-paced world of cryptocurrencies.