FATF Urges DeFi Regulation to Combat Money Laundering

July 22, 2026 · Regulation · CryptoRefuge Team

The Financial Action Task Force (FATF), the world's main anti-money-laundering body, has called for the regulation of DeFi platforms to prevent money laundering.

93% of jurisdictions have yet to apply the rules, leaving a gap in the global regulatory framework. According to the FATF, centralized elements "frequently persist" in DeFi and should be subject to regulation.

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DeFi platforms, despite being decentralized, often have centralized elements that can be exploited for illicit activities. The recent hacks of Solana perpetuals exchange Drift Protocol and KelpDAO, which resulted in losses of $285 million and $292 million, respectively, highlight the need for effective regulation.

$570 million was drained by North Korean hackers in two April attacks, accounting for 76% of the year's crypto-hacking losses.

FATF President Giles Thomson emphasized the need to "stop criminals exploiting new technology to 'launder dirty money' while 'supporting responsible financial innovation'".

"stop criminals exploiting new technology to 'launder dirty money' while 'supporting responsible financial innovation'" — Giles Thomson, FATF President

The total value locked in DeFi has increased by 85% since 2023, reaching $86.6 billion, accompanied by a rise in illicit activity. The FATF's call for regulation may lead to increased security and reduced illicit activity in DeFi, but it also raises concerns about the potential impact on innovation and access to financial services. The FATF's guidelines are used by 200 jurisdictions, and 142 jurisdictions responded to a recent survey on DeFi regulation. However, only 26 jurisdictions have assessed the risks associated with DeFi, and only 4 have licensing rules on the books.

2 jurisdictions have used licensing rules to register or license a platform.

Analysis: If the FATF's guidelines are widely adopted, it could lead to increased regulatory clarity and a reduction in illicit activity in DeFi. However, it may also limit innovation and access to financial services, particularly in jurisdictions with stringent regulations. A balanced approach that supports responsible financial innovation while preventing money laundering is crucial for the long-term growth and development of the DeFi sector.

The effectiveness of the regulations in preventing money laundering and supporting innovation will be crucial in determining the future of DeFi, as jurisdictions respond to the FATF's call for regulation.