The Polygon Labs legal team has proposed classifying DeFi protocols as critical infrastructure that should be monitored by a federal cybersecurity agency in the United States.

Experts Rebecca Rettig and Katja Gilman from Polygon Labs, together with co-founder of the law firm Arktouros Michael Mosier, published “A Framework for Combating Illicit Financial Activity in Decentralized Finance.” The document proposes to designate DeFi protocols as critical infrastructure, which will be monitored by the US Department of the Treasury's Office of Cybersecurity and Critical Infrastructure Protection (OCCIP).

OCCIP is not an official financial regulator, but the agency coordinates the actions of the Ministry of Finance to improve the safety and soundness of the financial services sector and reduce operational risks. OCCIP collaborates with financial institutions, industry groups, and government partners to share information about threats and vulnerabilities.

The document points out that not all DeFi protocols are truly decentralized, so they must comply with current financial regulations. The Polygon Labs team also proposed creating a new category of “critical information transmitters” that interact with and are an integral part of DeFi systems. These organizations are expected to make certain commitments to help protect the national and economic security of the United States. However, they will not be considered financial institutions subject to the Bank Secrecy Act (BSA).

Under the proposed rules, centralized finance (CeFi) would be considered a separate sector with independent oversight based on the requirements of the US Financial Crimes Enforcement Network (FinCEN). The authors of the document came to the conclusion that in order to stop illegal financial activities, we should not forget about the opportunities DeFi can contribute to the economic prosperity of the United States.

Recall that this month the US Commodity Futures Trading Commission (CFTC) called on federal authorities to find ways to identify people using DeFi services. Officials are pushing for DeFi projects to comply with anti-money laundering and anti-terrorist financing regulations.