The U.S. Treasury has emphasized the importance of decentralized finance adhering to anti-money laundering (AML) regulations to prevent illicit finance. Zero-knowledge (ZK) technology can assist DeFi applications in complying with AML laws while maintaining user data privacy. Despite crypto's association with criminal activity, only 1% of all crypto transactions last year were illicit. ZK technology can also aid in the institutional adoption of crypto by enabling traditional finance players to demonstrate compliance with regulatory standards without sharing personal information. The incorporation of ZK technology into digital identity frameworks is gaining attention, and it can play a significant role in ensuring a safe crypto industry.