The U.S. Treasury Department, sort of analogous to our Department of Economy and Finance, released a lengthy document yesterday that tries to summarize the risks of decentralized finance - clearly from the perspective of authorities, not just users.
It's a comprehensive document that also mentions recent cases of hacking or attacks on such systems, as well as some interesting state-of-the-art information.
Many people, especially in the U.S., have focused on what the document says in relation to the authorities' attack on DeFi, often taking phrases out of context and not fully understanding the overall discourse that the U.S. Treasury is trying to create.
And if you look at the finger rather than the moon, you might miss a few details. The most important one? The repeated admission that very little dirty money goes through DeFi systems, at least compared to traditional systems.

Money laundering, terrorism, and drugs: the three main problems of the U.S. Treasury

The horsemen of the apocalypse for the world's monetary authorities are not four, but three. Indeed, their whole set of concerns can be reduced to protecting society from three ever-present threats: drug trafficking, terrorism, and money laundering.
The story we have seen play out even when, more than a decade ago, the big threat was cryptography, now available to everyone--and even before that, the Internet, and even before that, the press. The stage trick, if you can call it that, is always the same: Justify even the most invasive interventions by stirring up audiences with threats to the lives, integrity, and peace of mind of citizens.

DeFi systems often fail to implement AML/KYC

For those who are not at ease with America's appetite for acronyms, a brief summary. AML stands for anti-money laundering. This acronym includes all systems imposed on banks and money transfers to prevent the use of these services for money laundering. KYC, on the other hand, stands for Know Your Customer. It is crucial to AML.
The main concern of the U.S. Treasury is that DeFi systems-at least the big ones-not only don't include certain systems, but they're not going to. And after being reminded that all U.S. citizens, even those overseas, are required to comply with such regulations.

Regulating exchanges is not enough

Assuming, but not admitting, that terrorists and mobsters use DeFi, sooner or later - even the Treasury has realized this - they will have to go back to fiat, which means converting what they get into money that is easier to spend in the real world. To do this, they tend to need centralized exchanges. This is why authorities all over the world, including Europe, are trying to put any such operator under their control.
However, according to the U.S. Treasury, this may not be enough precisely because some exchanges, at least in their opinion, also will not apply the typical AML and KYC measures. That's not quite right - and besides, let's remember that exchanges that don't have these practices have two difficulties that result from it: the first is to have access to banks worthy of the name. The second is to have enough liquidity to convert cryptocurrencies for multi-million dollar criminal activities.