Funds that passed through DeFi protocols, NFT marketplaces or cross-chain bridges are documented by following each step on-chain: swaps, liquidity deposits and withdrawals, loans, NFT purchases and sales, and bridge deposits with their matching release on the other chain are decoded and reconciled, so the amount leaving can be linked to the amount that entered. Because these flows are public they can usually be reconstructed, but a bank needs them explained in plain terms. It will also check for exposure to exploited protocols, mixers or sanctioned services.
Why DeFi raises questions
In DeFi there is no exchange that identified you and no statement to download. Transactions involve smart contracts rather than named counterparties, several tokens can be involved in a single operation, and bridges move value between blockchains in ways a standard explorer does not connect. Some protocols have been exploited and some services have been sanctioned, so banks look at these flows more carefully.
How each step is documented
Where activity spans several blockchains, the report presents one reconciled timeline rather than separate lists per chain, so the bank can follow the value from the first deposit to the final sale without switching between explorers.
- Swaps on decentralised exchanges: input and output tokens, amounts and the pool used.
- Liquidity provision: deposit, LP tokens received, fees earned and withdrawal.
- Lending and borrowing: collateral posted, loans taken, repayments and any liquidation.
- NFTs: purchase price, marketplace, holding period and sale, with checks for wash trading between related wallets.
- Bridges and wrapped tokens: the deposit on the source chain matched to the release on the destination chain by amount, time and bridge records.
Explaining gains and losses
The report should show where the value came from: the original capital that entered DeFi, the yields and trading gains, and the costs, including network fees. Using historical prices for each step lets the bank see that the final amount is the result of identifiable activity, not of an unexplained inflow.
Risk points to address
Interaction with a protocol that was later exploited, unsolicited tokens sent to your wallet, or indirect contact with sanctioned addresses can appear in a bank's screening. A good report identifies these points before the bank does and explains whether the exposure is incidental or material.
How Advisorn helps
Advisorn decodes DeFi, NFT and bridge activity and signs a report that a non-technical compliance officer can follow. We also answer the bank's follow-up questions.
FATF Updated Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers (2021)
Updated November 2026 · General information, not legal or tax advice on your specific case.