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CFTC Urges Policymakers to Identify Individuals Involved in Decentralized Finance Amid Money Laundering and Terrorism Financing Concerns

The Commodity Futures Trading Commission (CFTC) is urging policymakers to find ways to identify individuals involved in decentralized finance (DeFi) due to concerns over money laundering, terrorism financing, and fraud. The CFTC report suggests prioritizing digital identity, know your customer (KYC), and anti-money laundering (AML) regimes, as well as calibrating privacy in DeFi. Regulators are struggling to regulate DeFi due to the widespread use of pseudonyms to hide users' identities and the decentralized nature of the industry. The lack of clear lines of responsibility and accountability in DeFi systems is also a central concern for regulators.

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