Cryptocurrency rules are more and more aligning with international requirements; 73% of eligible jurisdictions have now handed legal guidelines to implement the Monetary Motion Activity Drive’s (FATF) Journey Rule.
The Journey Rule mandates crypto service suppliers to gather and share customers’ transaction information, just like conventional finance necessities. On June 26, the FATF launched its annual report that outlines how latest regulatory strikes by jurisdictions are converging with its international Anti-Cash Laundering (AML) framework.
It is a direct results of a years-long marketing campaign by the FATF to carry cryptocurrencies according to conventional AML and Counter-Terrorist Financing (CFT) requirements.
The FATF spotlighted stablecoins and decentralized finance (DeFi) for the second consecutive 12 months, highlighting their rising use in illicit finance, together with by North Korean actors. The group mentioned it plans to launch focused papers on stablecoins, offshore crypto platforms and DeFi by subsequent summer season, hinting at the place international crypto regulation might head subsequent.
How the FATF turned the spine of crypto regulation
The FATF’s Journey Rule was prolonged to cowl cryptocurrencies and exchanges in 2019 as a part of the group’s requirements on AML/CFT. It was added to Advice 15 (R.15) — considered one of FATF’s 40 suggestions — as an interpretive notice.
Out of 138 jurisdictions, just one has achieved full compliance with R.15 in 2025. In the meantime, 40 jurisdictions had been assessed as “largely compliant,” up from 32 in 2024. Three jurisdictions had been faraway from the noncompliance class.
Compliance means a jurisdiction has enacted legal guidelines requiring the licensing or registration of digital asset service suppliers (VASPs) — reminiscent of cryptocurrency exchanges and buying and selling platforms — or has recognized the authorized individuals conducting VASP-related actions. The licensing necessities throughout jurisdictions are “very comparable,” together with in areas vying to be labeled as “crypto hubs,” reminiscent of Singapore, Dubai and Hong Kong, Joshua Chu, co-chair of the Hong Kong Web3 Affiliation, advised Cointelegraph.
The Financial Authority of Singapore, the city-state’s central financial institution, lately issued a warning to crypto exchanges partaking in regulatory arbitrage by avoiding a neighborhood license and relying solely on abroad prospects. The exchanges had been suggested to both get licensed or exit by the top of June.
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The transfer sparked debate over whether or not Singapore really goals to grow to be a powerhouse for digital belongings. Some within the business speculate that Hong Kong may benefit most from its regional rival’s crackdown on unlicensed exchanges.
Chu warned that these in search of greener pastures in competing crypto hubs might find yourself dissatisfied, as all are adhering to the identical FATF necessities. The truth is, Singapore has issued extra crypto licenses than Hong Kong.
“Regulators are additionally deadline fighters. So, they’ll make last-minute bulletins (most likely understanding the [FATF] draft of the report by that time) to see how they will enhance their place earlier than the formal report comes out,” Chu mentioned.
“Consequently, many jurisdictions have accelerated efforts to tighten controls, enhance danger assessments and implement the FATF Journey Rule. The FATF’s June 2025 report displays this urgency, exhibiting that whereas progress has been made, important gaps stay in danger evaluation, licensing and enforcement.”
Hong Kong has additionally been sprinting to roll out further crypto guidelines. In Might, its upcoming Stablecoin Ordinance handed the Legislative Council. The town then launched an up to date coverage assertion in tandem with FATF’s report.
The FATF mentioned an rising variety of jurisdictions have now determined how they need to regulate their respective crypto sectors, with 82% of 163 respondents stating they’ve recognized their most well-liked regulatory method. There are two predominant instructions jurisdictions can take: to allow or to ban, with prohibitions starting from a fan of blanket bans.
Prohibition is changing into extra frequent amongst Center East and North Africa Monetary Motion Activity Drive and Jap and Southern Africa Anti-Cash Laundering Group members. Nonetheless, the FATF warns that jurisdictions ought to contemplate this method fastidiously, as full prohibition may be resource-intensive and tough to implement.
“When jurisdictions select to ban moderately than regulate, they don’t remove the presence of crypto inside their borders. As an alternative, they relinquish oversight, enforcement leverage and visibility into illicit flows,” Hedi Navazan, chief compliance officer of 1inch Labs and vice chair of the Digital Asset Activity Drive of the World Coalition to Battle Monetary Crime, advised Cointelegraph.
“Let’s be actual, crypto is borderless,” she added.
China, an FATF member, has partially prohibited cryptocurrency-related actions, reminiscent of transactions and mining. However the decentralized nature of blockchain expertise nonetheless makes cryptocurrencies largely accessible to the general public. Though Beijing has banned Bitcoin (BTC) mining, Chinese language mining swimming pools proceed to regulate nearly all of the community’s hashrate.
Stablecoins and DeFi below the FATF highlight
Stablecoins and DeFi received their very own sections in FATF’s report for the second consecutive 12 months within the newest replace.
Stablecoins, specifically, have been among the many greatest tales in crypto in 2025 thus far, with main jurisdictions advancing legislative proposals for stablecoin licensing, together with the GENIUS Act within the US, which opens doorways for tech corporations to launch personal stablecoins. The European Union has pushed additional with Markets in Crypto-Property (MiCA) Regulation, which units guidelines for stablecoin issuers.
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However stablecoins have additionally been more and more tied to illicit actions, together with reliance by North Korean actors suspected of financing the state’s weapons program, with business estimates suggesting 63% of illicit transaction volumes had been denominated in stablecoins.
“Stablecoins, particularly USDT on the Tron community, have mainly grow to be the go-to device for illicit actors. From North Korean hackers to rip-off networks… this isn’t only a area of interest downside anymore,” mentioned Navazan.
Regardless of rising regulatory consideration, most jurisdictions are nonetheless struggling to use FATF requirements to DeFi. In accordance with the FATF’s 2025 report, practically half of the jurisdictions which have carried out or are engaged on the Journey Rule say that some DeFi platforms needs to be licensed as VASPs, however most haven’t recognized any such entities in observe.
Out of 47 jurisdictions that declare DeFi can fall below VASP regulation, 75% have but to search out or license a single DeFi platform.
Ignoring FATF requirements can isolate an economic system
The FATF’s affect is embedded inside the United Nations framework, with a number of UN Safety Council resolutions urging member states to implement FATF requirements.
“This implies jurisdictions face sturdy, concrete incentives to align their legal guidelines with FATF’s evolving requirements, not merely out of goodwill however to keep away from extreme penalties,” Chu mentioned.
Grey itemizing serves as a robust enforcement device for FATF, because it locations a jurisdiction below elevated monitoring, leading to financial and reputational penalties. Budding crypto hub Dubai was previously on the grey listing earlier than the United Arab Emirates was eliminated in 2024.
“Whereas FATF doesn’t make the legislation, you’ll be silly to disregard it. When FATF speaks, regulators all over the world pay attention. That’s the way it’s at all times labored,” mentioned Navazan.
“In case your nation doesn’t align with these requirements, it doesn’t simply danger a poor score — it dangers changing into remoted.”
The FATF’s statements, together with its annual updates on crypto, provide a preview of the place international rules are headed. With stablecoins and DeFi rising as key areas of concern in 2025, the FATF’s deliberate analysis into these sectors is anticipated to form the following wave of compliance measures.
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