DeFi Firms Told to Comply or Face Global Bans

The Financial Action Task Force (FATF) has issued a stern warning to the decentralized finance (DeFi) sector, stating that many platforms retain centralized elements that require immediate regulatory oversight.

According to the FATF, DeFi protocols were initially designed to operate without intermediaries, using immutable smart contracts on blockchain networks. However, in practice, many projects maintain admin keys and token-based governance, which can result in a concentration of power.

The international organization urges jurisdictions to identify Virtual Asset Service Providers (VASPs) behind these projects and comply with anti-money laundering (AML) and counter-terrorist financing (CFT) regulations. If governments fail to implement this regulation, the risk of drastic measures at the international level will increase significantly.