This topic gets more important from a geopolitical perspective, the results of the USA elections and the rapid growth of the Decentralized Finance (DeFi) market with potential regulatory incentives by the new administration introduce new challenges and opportunities for TPRM due to the transformative revolution of DeFi on traditional banking systems. DeFi, leveraging blockchain technology and smart contracts, has emerged as a significant disruptor in the financial industry by offering decentralized, transparent, and accessible financial services.
Growing DeFI trend and showcases:
This is a growing trend in which already many relevant and well known brands such as PayPal, Microsoft, Starbucks and McDonald’s, are accepting cryptocurrency as payments.
What does it mean for compliance officers?
Recent Judicial Precedent in Sanctions and Compliance:
Tornado Cash, which is a mixer (privacy tool) built on Ethereum Blockchain designed to conceal digital asset ownership by allowing users to deposit various cryptocurrencies into a shared pool was involved in a lawsuit in which the USD Federal Court acknowledged that immutable smart contracts are not subject to economic sanctions from OFAC as they are not owned by anyone. This decision may influence future regulatory approaches to decentralized protocols and open-source code in the cryptocurrency space. Full Content of the Civil Action Nº 6:22-cv-920
TPRM in 2025:
The increasing complexity and expansion of Third-Party support to the business operations led to a trend significant focus on oversight and monitoring drivers to improve internal and external reporting systems, which require conscious allocation of resources and comprehensive coverage according to the key aspects of the Department of Justice’s (DOJ) updated on September 2024 Evaluation of Corporate Compliance Programs (ECCP) guidance.
Constant Update and Evolving Scenario:
As a main takeaway it is important to keep up to date with the evolving scenario and regulatory framework as well as the best practices keeping an eye on how the geopolitical convolution (Election in the USA, Revolution in Syria, Political turmoil in South Korea) can impact international compliance decisions and risk function.
Conclusion
As a main takeaway it is important to keep up to date with the evolving scenario and regulatory framework as well as the best practices keeping an eye on how the geopolitical convolution (Election in the USA, Revolution in Syria, Political turmoil in South Korea) can impact international compliance decisions and risk function.
December 2024
JP
Global Director of Governance, Risk & Compliance | PhD Candidate | Internationally Qualified Attorney
