Depending on your jurisdiction it is probably your responsibility to enforce your copyright. I can always just record your music off a streaming platform. You can attach a license to your song in funkwhale (see this). If you want DRM for your music then funkwhale is probably also not for your. You still have to enforce your self that nobody monetizes your works if you don’t allow it. You can delete things from the fediverse if you know the source but I don’t think funkwhale allows DRM protected music.
If you attach a license to your works that doesn’t allow monetization and they monetize the app you can sue them. I doubt they will though. And they probably wouldn’t be very successful because the app and the server are open source. You could just build the app without monetization. And someone probably would.
The upload and sharing copyrighted music probably falls into the hands of the instance admin. As with PeerTube it is probably not a good idea to have open signups. But everyone has to make sure that doesn’t happen.
The fediverse is an open and very liberal space. If you want full control over your works it is probably not for you. No software with federation probably is. If you want and need to control over your works (which is legitimate) you need something with a tighter grip, maybe host the things yourself on your server with DRM. That doesn’t mean it is bad for everyone.