In this episode of The Crypto Exchange, Troutman Pepper Partner Ethan Ostroff welcomes his colleagues Mike Lowe and Matt Orso to discuss the U.S. Department of Treasury’s Illicit Finance Risk Assessment of Decentralized Finance (DeFi), which assesses how illicit actors are abusing DeFi services, as well as vulnerabilities unique to DeFi services.

With this assessment, the Treasury has signaled its intent to increase focus on the DeFi sector, expecting DeFi market actors to integrate anti-money laundering (AML) and counter-terrorism financing (CFT) compliance into their services.

Ethan, Mike, and Matt take a deep dive into the biggest takeaways from the assessment, including:

  • DeFi services often don’t comply with the Bank Secrecy Act, as well as AML and CFT regulations.
  • Illicit actors use DeFi for money laundering due to the high level of anonymity it offers.
  • DeFi services, often small startups, are vulnerable to hacking.

Additionally, the Treasury also posed five questions in the assessment and is seeking public input on those questions. Our attorneys discuss the key points that the Treasury is looking for through the public’s input.

Transcript: Analyzing the Treasury’s Illicit Finance Risk Assessment of Decentralized Finance (PDF)

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Photo of Ethan G. Ostroff Ethan G. Ostroff

Ethan’s practice focuses on financial services litigation and compliance counseling, as well as digital assets and blockchain technology. With a long track record of successful litigation results across the U.S., both bank and non-bank clients rely on him for comprehensive advice throughout their

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Ethan’s practice focuses on financial services litigation and compliance counseling, as well as digital assets and blockchain technology. With a long track record of successful litigation results across the U.S., both bank and non-bank clients rely on him for comprehensive advice throughout their business cycle.

Read more about Ethan G. OstroffEthan G.'s Linkedin Profile
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Photo of Michael S. Lowe Michael S. Lowe

As a seasoned former federal prosecutor in Philadelphia and Los Angeles, Michael provides unique insights and practical guidance to clients facing investigation or prosecution for allegations of fraud and other financial crimes and civil False Claims Act suits. Michael is experienced in the

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As a seasoned former federal prosecutor in Philadelphia and Los Angeles, Michael provides unique insights and practical guidance to clients facing investigation or prosecution for allegations of fraud and other financial crimes and civil False Claims Act suits. Michael is experienced in the NIL and higher education space. He currently represents an NCAA Division I athletic conference in connection with the settlement of the House antitrust litigation, as well as NIL issues and conference policies and procedures. He also has provided advice to an NCAA Division I university in connection with NIL and has experience with investigations of potential NIL violations. In addition to representing clients in this area, Michael frequently writes, speaks, and presents on cutting-edge NIL issues.

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