FATF’s Crypto Checklist Will Show You Where Regulation is Going
73% of eligible jurisdictions have enacted laws to implement the FATF's Travel Rule, which requires crypto service providers to collect and share transaction data. The FATF's annual report highlights a convergence of regulatory moves with its global AML framework, driven by a campaign to align cryptocurrencies with traditional finance standards. Stablecoins and DeFi are under scrutiny for their use in illicit finance, particularly by North Korean actors. Only one out of 138 jurisdictions fully complies with the Travel Rule, while 40 are largely compliant. Licensing requirements for VASPs are becoming standardized across jurisdictions. Singapore has warned exchanges against regulatory arbitrage, while Hong Kong is rapidly implementing new crypto regulations. Prohibition of crypto activities is increasing in certain regions, but the FATF cautions against it due to enforcement challenges. Stablecoins are linked to significant illicit transactions, with 63% of such volumes denominated in stablecoins. Nearly half of jurisdictions recognize DeFi platforms as VASPs, but most have not licensed any. Non-compliance with FATF standards risks economic isolation for jurisdictions.
