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Financial crime in the decentralized finance ecosystem: new challenges for compliance

Author

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  • Christoph Wronka

Abstract

Purpose - As decentralized finance (DeFi) has collected substantial promotion, investment and cryptographic development as a new model for numerous financial operations over the last months. As DeFi models and technology are quite unique, authorities have not been engaged much yet. However, these non-regulated financial markets will be overlooked for no long by the regulators. Therefore, the purpose of this paper is to analyse and evaluate the new challenges for financial crime compliance which need to be tackled very soon. Design/methodology/approach - The research relied on secondary sources of data, using secondary research to collect archival data in the form of documents. Content and thematic analyses were used to synthesize the collected data Findings - DeFi is considered to be one of the major steps towards adopting crypto masses. It is expected that DeFi will play a significant role in future and provide the present banking system with a feasible alternative. Therefore, it is crucial that the DeFi industry must address the main risks to ensure its “user” full compliance. Originality/value - This research is the first to analyse the emerging challenges of fighting financial crime in the DeFi ecosystem.

Suggested Citation

  • Christoph Wronka, 2021. "Financial crime in the decentralized finance ecosystem: new challenges for compliance," Journal of Financial Crime, Emerald Group Publishing Limited, vol. 30(1), pages 97-113, November.
    • Handle: RePEc:eme:jfcpps:jfc-09-2021-0218
    DOI: 10.1108/JFC-09-2021-0218
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    Citations

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    Cited by:

    1. Şoiman, Florentina & Dumas, Jean-Guillaume & Jimenez-Garces, Sonia, 2023. "What drives DeFi market returns?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 85(C).
    2. Kirimhan, Destan, 2023. "Importance of anti-money laundering regulations among prosumers for a cybersecure decentralized finance," Journal of Business Research, Elsevier, vol. 157(C).
    3. Piñeiro-Chousa, Juan & Šević, Aleksandar & González-López, Isaac, 2023. "Impact of social metrics in decentralized finance," Journal of Business Research, Elsevier, vol. 158(C).

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