Document Type

Article

Publication Date

2026

Abstract

The crypto ecosystem has become a new frontier for money laundering, with criminals exploiting its anonymous and pseudonymous features. This Article explores how money laundering operates in the crypto space and highlights emerging trends. It then examines the existing legal and regulatory framework and argues that its core weakness lies in its reliance on trusted intermediaries. This approach conflicts with the philosophy that shaped the emergence of the crypto industry-one grounded in disintermediation and decentralized trust. To address this tension, this Article demystifies decentralization, showing that it is not a binary condition but instead exists on a spectrum. Across the dimensions of development, governance, and operation, some projects remain highly centralized despite adopting the label of "DeFi" or "decentralized." Arguably only Bitcoin has achieved near-total decentralization, and most others fall somewhere in between. Recognizing this dynamic is crucial for crafting effective regulatory responses. Finally, this Article proposes combining blockchain intelligence with a digital identity system to form a decentralized digital infrastructure that delineates the roles of public and private actors and distributes responsibilities among these stakeholders. Together, these technological tools and regulatory designs can strengthen the investigation, tracing, and seizure of illicit funds in the crypto space, while preserving a certain degree of decentralization that the industry values. This Article also reconceptualizes decentralization not merely as a technological design but as a regulatory strategy-one that shifts the anti-money laundering paradigm from centralized oversight to collective responsibility.

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