The Bank of Italy labels Bitcoin P2P services as ‘crime-as-a-service’ due to their role in money laundering. These platforms exploit regulatory loopholes, successfully avoiding know-your-customer (KYC) and anti-money laundering (AML) measures to facilitate illegal transactions.
Decentralized finance (DeFi) creates regulatory challenges, operating without intermediaries. This anonymity allows users to conduct transactions without revealing identities, complicating the monitoring of illegal activities in the cryptocurrency space.
While innovations such as ZERO-Knowledge Proofs (ZKP) hold promise for reducing illicit activities, they fail to provide consistent due diligence. The Bank of Italy underscores the urgency to close existing regulatory gaps to counter organized crime effectively.