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DeFiisrevolutionizingthefinancialworldbyprovidingopen,approval-free,peer-to-peerwaysto transact,thankstoblockchain.DeFiallowsmorefinancialopportunitiesanddifference,butitalso presentsproblemsforAMLandcompliance due tohowitisdecentralized,usespseudonymsand is available in different countries. It describes in detail the barriers faced in DeFi within the EU duetotechnologyandregulations.ItdiscusseswhytraditionallawsareoftenunsuitableforDeFi, leading to questions about regulations, regulatory boundaries and any gaps in enforcing them. StudyingspecificcasesintheEU,thearticleexploresthejourneyofAMLregulationsandpoints out some of the obstacles inside the regulatory sphere due to swift changes in decentralized technology.Movingon,ithighlightsthatitisdifficulttoenforcethelawindecentralizednetworks. The study puts forward a group of guidelines in policy, law and technology to improve AML compliance in DeFi without hindering its advancements. For example, EU regulators may align theirrulesformemberstates,createbetterframeworksforliabilityofdecentralizedmarketactors, utilizeregtechandencourageteamworkbetweenregulators,technologistsandindustrymembers. Based on the findings, rigid and uncooperative regulations will not only fail to tackle issues in DeFibutalsoslowdowninnovation.Thus,thisarticleoffersideasforfuturediscussionsandrules on safeguarding money matters in the growing world of decentralized finance.
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Muhammad Waqar Naeem (2025) studied this question.