In a recent paper by executives from Polygon Labs and a former director of the Financial Crimes Enforcement Network (FinCEN), a comprehensive framework has been proposed to address and mitigate illicit activities within the decentralised finance (defi) sector.
The document delineates defi platforms into three distinct categories: those governed by centralised entities, authentic defi systems, and crucial communication transmitters.
This classification aims to provide a structured approach to regulate and oversee these platforms effectively, tailoring regulatory measures to the nature and operations of each category.
The initiative underscores the increasing concern over illegal transactions in the defi space and represents a significant step towards establishing a safer and more transparent ecosystem.
Through this framework, the authors advocate for a balanced regulatory strategy that not only curbs illegal activities but also fosters innovation and growth within the defi sector.