Identity Management Institute raises concerns over identity, access, and fraud risks in Decentralized Finance (DeFi) and cryptocurrency wallets. With the increasing use of cryptocurrency wallets and perhaps the inevitable arrival of a decentralized financial system, the foreseeable risks of identity theft and fraud must not be ignored.
The most substantial risks in decentralized finance will be in the area of identity and access management (IAM) which will be of utmost importance in DeFi in the coming years to protect against the wide range of fraud scams that are projected to become prevalent.
Criminals will attempt to use old schemes like malware injection and phishing attacks to obtain credentials to commit financial fraud. The usual host of IAM-related threats will continue to be prevalent in the industry, such as infiltrating an organization’s computer network, using insiders to obtain access credentials, and using fake forms to harvest account information. These inevitable scams will become widespread, so people involved in DeFi at all levels need to follow identity and access management best practices to stay protected.
According to Henry Bagdasarian, Founder and President of Identity Management Institute, a leading global organization in identity and access management, “DeFi and cryptocurrency are uncharted territories which present a significant cybersecurity and fraud risk evidenced by the increasing number of stolen crypto wallets in recent times. Other areas of concern are increasing number of crypto trading platforms and apps entering the market, young trader demographics many of whom are still in high school, and unregulated nature of the industry leaving government regulators out of sight although DeFi and cryptocurrency regulations are expected soon”.
Protecting crypto wallets is another major risk. Simply storing wallets on a computer is not usually enough to keep them safe. Instead, wallets often need to be physically stored in an offline vault. Balances in “hot” wallets that are used in day-to-day operations should be kept to a minimum and distributed across multiple apps, and they should only be accessed with secure software to protect crypto investments.
In summary, identity and access management is important in DeFi and crypto asset management. Organizations and people need to rely on IAM best practices to protect their crypto wallets as well as DeFi accounts and databases.