Recently, there have been reports that the U.S. Department of the Treasury has proposed tighter regulations on DeFi platforms. I think this is a pretty significant move for the crypto market.

In a report submitted to Congress based on the GENIUS Act, it recommends imposing the same level of obligations on anti-money laundering (AML) measures—what is called AML—regarding decentralized financial applications as on counter-terrorism financing measures. In other words, AML is a basic framework to prevent financial crimes, but until now, there have been many gray areas in the crypto sector.

What’s even more noteworthy is the proposal of a safe harbor called the “Hold Law.” If implemented, institutions could temporarily freeze suspicious funds under investigation without waiting for a court order. This means regulatory authorities’ powers would be significantly strengthened.

The reason for this rush is that crypto-related crimes are truly increasing. According to FBI statistics, approximately $9 billion in crypto scams were recorded just in 2024. Looking at this number, it’s understandable why regulators are feeling the pressure.

From this trend, it seems inevitable that regulation of the DeFi space is moving forward. Protocol and platform operators will need to seriously consider how to comply with these kinds of regulatory requirements in the future. As the market progresses in compliance measures, the barriers for institutional investors to enter could also decrease.