The regulations on cryptocurrencies are increasingly aligned with global standards; 73% of eligible jurisdictions have now adopted laws to implement the travel rule of the Financial Action Working Group (FATF).
The travel rule obliges cryptographic service providers to collect and share user transaction data, similar to traditional financing requirements. On June 26, the FATF published its annual report which describes how recent regulatory movements by the courts converge with its global anti-flange framework (AML).
This is the direct result of a campaign of several years of the FATF to bring cryptocurrencies in accordance with traditional standards of LMA financing and the fight against terrorism (CFT).
The FATF has highlighted staboins and decentralized finances (DEFI) for the second consecutive year, highlighting their growing use in illicit finance, including by North Korean actors. The organization said it was planning to publish targeted articles on stablecoins, offshore and deffi cryptographic platforms by next summer, alluding to the global cryptography regulations could then go.
How the FATF has become the backbone of the regulation of cryptography
The FATF travel rule was extended to cover cryptocurrencies and exchanges in 2019 as part of organizational standards on LMA / CFT. It was added to recommendation 15 (R.15) – one of the 40 recommendations of the FATF – as an interpretation note.
Out of 138 jurisdictions, only one obtained full compliance with R.15 in 2025. Meanwhile, 40 jurisdictions were considered to be “largely in conformity”, against 32 in 2024. Three jurisdictions were removed from the category of non-conformity.
Compliance means that a jurisdiction has promulgated laws requiring license or registration of virtual asset service providers (VASP) – such as cryptocurrency exchanges and trading platforms – or identified legal persons carrying out VSAP activities. The license requirements through the courts are “very similar”, including in the regions in the running to be labeled as “crypto hubs”, such as Singapore, Dubai and Hong Kong, said Joshua Chu, co -president of Hong Kong Web3 Association, told Cointelegraph.
The monetary authority of Singapore, the central bank of the state of the city, recently issued a warning to the exchanges of crypto engaging in regulatory arbitration by avoiding a local license and relying solely on foreign customers. The exchanges were invited to obtain a license or to be released by the end of June.
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This decision sparked a debate on the question of whether Singapore really aims to become a power for digital assets. Some in industry assume that Hong Kong could benefit the most from the repression of its regional rival against license without license.
CHU warned that those who were looking for greener pastures in competing crypto centers could end up disappointed, because all respect the same requirements of the FATF. In fact, Singapore delivered more cryptographic licenses than Hong Kong.
“The regulators are also future fighters. So they will make last minute announcements (probably knowing the project (FATF) of the report at this stage) to see how they can improve their position before the release of the official report,” said CHU.
“Consequently, many jurisdictions have accelerated efforts to tighten controls, improve risk assessments and enforce the FATF travel rule. The FATF report in June 2025 reflects this emergency, showing that even if progress has been made, significant gaps remain in risk assessment, license and application. ”
Hong Kong also sprint to deploy additional cryptography rules. In May, his next Stablecoin order adopted the Legislative Council. The city then published a statement of updated policy in tandem with the FATF report.
The FATF said that an increasing number of jurisdictions have now decided how they wanted to regulate their respective cryptography sectors, 82% of the 163 respondents declaring that they have identified their favorite regulatory approach. There are two main guidelines, the courts may take: allow or prohibit, with prohibitions ranging from partial prohibitions to general prohibitions.
The prohibition is becoming more and more common among the members of the Middle East and North African financial action group and members of the anti-balance group in East Africa and Southern Africa. However, the FATF warns that the courts should carefully consider this approach, because a complete prohibition can be at high intensity of resources and difficult to apply.
“When the courts choose to prohibit rather than regulate, they do not eliminate the presence of crypto inside their borders.
“Let’s be real, the crypto is without border,” she added.
China, a member of the FATF, partially prohibited activities related to cryptocurrency, such as transactions and mining. But the decentralized nature of blockchain technology always makes cryptocurrencies widely accessible to the public. Although Beijing has prohibited Bitcoin mining (BTC), Chinese mining swimming pools continue to control the majority of the network’s hashrate.
Stablecoins and defi under the Fatf projectors
Stablecoins and Defi obtained their own sections in the FATF report for the second consecutive year in the last update.
Stablecoins, in particular, have been among the largest crypto stories in 2025 so far, the major jurisdictions progressing the legislative proposals for a stablecoin license, including the law on engineering in the United States, which opens doors to technological companies to launch private stablecoins. The European Union pushed further with the markets of the Crypto-Astets Regulation (Mica), which establishes rules for stablecoin issuers.
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But the stablecoins have also been increasingly linked to illicit activities, including the dependence of North Korean actors suspected of finance the program of weapons of the State, the estimates of the industry suggesting that 63% of the volumes of illicit transactions were labeled in staboins.
“The Stablecoins, in particular the USDT on the Tron network, have essentially become the essential tool of illicit actors. From North Korean pirates to scam networks … It is no longer just a niche problem,” said Navazan.
Despite increasing regulatory attention, most jurisdictions are still struggling to apply GRAF to Defi standards. According to the FATF report in 2025, almost half of the courts that have implemented or work on the travel rule indicate that certain DEFI platforms should be authorized in the form of VASP, but most have identified such entities in practice.
Out of 47 jurisdictions which claim that DEFI can fall under VASP regulations, 75% have not yet found or dismissed a single DEFI platform.
Ignoring graf standards can isolate an economy
The influence of the FARF is anchored within the framework of the United Nations, with several resolutions of the United Nations Security Council urging the Member States to implement the standards of the FATF.
“This means that the courts are faced with solid and concrete incentives to align their laws on the evolutionary standards of the FATF, not only out of deviation but to avoid serious consequences,” said CHU.
Gray registration serves as a powerful application tool for GAFA, as it places a jurisdiction under increased surveillance, resulting in economic and reputation consequences. The Dubai grass crypto hub was previously on the gray list before the United Arab Emirates were deleted in 2024.
“Although the FATF does not make the law, you would be stupid to ignore it. When the fatf speaks, regulators around the world listen. This is how it has always worked,” said Navazan.
“If your country does not align with these standards, it is not just a bad note – it may become isolated.”
FATF declarations, including its annual updates on the crypto, offer an overview of the Directorate of Global Regulations. With stablecoins and deficits as key areas of concern in 2025, the expected research of the FATF in these sectors should shape the next wave of compliance measures.
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