New Research on Institutional DeFi Integration and How to Manage Illicit Finance Risk

Decentralized Finance (DeFi) is reshaping financial infrastructure, but institutional adoption faces one major hurdle: managing illicit finance risk.

In a new paper by visiting fellow Yaya J. Fanusie and researcher Saskia Seidel, “Considering Institutional DeFi Integration: How To Manage Illicit Finance Risk,” they explore how banks and financial institutions can responsibly engage with DeFi using blockchain-native compliance tools such as programmable compliance, decentralized identity, and advanced analytics.

Rather than building entirely new regulations, they propose technology-first approaches that preserve DeFi’s transparency and efficiency while meeting AML/CFT standards.

Key takeaway: The future of finance depends on collaboration between regulators, institutions, and innovators to build compliant, permissionless systems.