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Importance of anti-money laundering regulations among prosumers for a cybersecure decentralized finance

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  • Kirimhan, Destan

Abstract

This study displays the importance of anti-money laundering (AML) regulations among prosumers in decentralized finance (DeFi) in establishing cybersecurity. With a game theory model based on an integrated framework of crime theories, we find that beneficial claims of financial inclusivity and pseudonymity of permissionless DeFi come with a cost of vulnerability to cyberattacks due to its incompliance with AML regulations among prosumers. In contrast, cyberattackers can be deterred from attacking AML-compliant permissioned DeFi. These results have important implications for trust as a construct within the context of blockchain-based sharing economy and institutional roles played by decentralized governance and smart contract auditors in creating a “trustless” state-space without forfeiting cybersecurity of a blockchain-based sharing economy. We also provide cybersecurity policy suggestions for permissionless DeFi without sacrificing its decentralized nature.

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  • Kirimhan, Destan, 2023. "Importance of anti-money laundering regulations among prosumers for a cybersecure decentralized finance," Journal of Business Research, Elsevier, vol. 157(C).
    • Handle: RePEc:eee:jbrese:v:157:y:2023:i:c:s0148296322010232
    DOI: 10.1016/j.jbusres.2022.113558
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    Cited by:

    1. Gunay, Samet & Goodell, John W. & Muhammed, Shahnawaz & Kirimhan, Destan, 2023. "Frequency connectedness between FinTech, NFT and DeFi: Considering linkages to investor sentiment," International Review of Financial Analysis, Elsevier, vol. 90(C).
    2. Tan, Teck Ming & Salo, Jari & Brashear Alejandro, Thomas G. & Wei-Han Tan, Garry & Ooi, Keng-Boon & Dwivedi, Yogesh K., 2024. "Guest editorial: A blockchain-based approach to marketing in the sharing economy," Journal of Business Research, Elsevier, vol. 177(C).
    3. Proelss, Juliane & Sévigny, Stéphane & Schweizer, Denis, 2023. "GameFi: The perfect symbiosis of blockchain, tokens, DeFi, and NFTs?," International Review of Financial Analysis, Elsevier, vol. 90(C).
    4. Ghaemi Asl, Mahdi & Ben Jabeur, Sami, 2024. "Tail connectedness of DeFi and CeFi with accessible banking pillars: Unveiling novel insights through wavelet and quantile cross-spectral coherence analyses," International Review of Financial Analysis, Elsevier, vol. 95(PB).
    5. Nikolaos T. Giannakopoulos & Dimitrios P. Reklitis & Marina C. Terzi & Damianos P. Sakas & Nikos Kanellos, 2024. "Video marketing for decentralized finance platforms’ services," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 29(4), pages 1225-1259, December.

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