An international financial watchdog group based in France is urging stronger global actions against the risks associated with crypto assets.
In a newly published study, the International Financial Action Task Force (FATF) – established in 1989 to promote policies that protect the global financial system – says that stronger actions are needed by crypto service providers to ensure safety.
According to FATF, while virtual asset service providers (VASPs) overall have made headway in terms of developing anti-money laundering protocols, progress still needs to be made on this front, highlighting the challenges associated with overseas providers.
“Progress has been made in jurisdictions requiring licensing and registration of VASPs. Nevertheless, further progress is required in licensing and registration in practice and jurisdictions continue to face difficulties in identifying natural or legal persons that conduct VASP activities.
Jurisdictions have reported challenges with mitigating the risk of offshore VASPs, with more than a third of jurisdictions with a licensing or registration framework applying a more extensive approach and requiring offshore VASPs (that are not created or located in their jurisdictions) to also be licensed/registered.”
According to FATF, many jurisdictions are in the process of creating “travel rules,” or rules set in place to ensure the transparency of cross-border crypto transfers.
“Jurisdictions have made progress on implementing the Travel Rule. For the 2025 survey, 73% of respondents (85 of 117 jurisdictions, excluding those that prohibit or plan to prohibit VASPs explicitly) have passed legislation implementing the Travel Rule…
Jurisdictions that have not yet introduced legislation or regulation to implement the Travel Rule should urgently do so [while] jurisdictions that have introduced the Travel Rule should rapidly operationalize it, including through effective supervision and enforcement in case of non-compliance.”
FATF concludes by noting that since digital assets are international by nature, a regulatory failure in one jurisdiction, such as North Korea, can have severe global consequences.
“The DPRK this year carried out the largest single VA theft in history, stealing $1.46 billion from the VASP ByBit. Only 3.8% of the stolen funds have been recovered, highlighting the need to address asset recovery challenges and improve international cooperation.”
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