Crypto▼ Bearish
FATF Warns Incomplete Crypto Regulation Fuels Illicit Finance
FATF's 7th update: 83% of jurisdictions adopted crypto rules, 11 lag. Offshore VASPs and stablecoin misuse exploited by criminals. Thomson calls for action.
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The Financial Action Task Force released its 7th Targeted Update on virtual asset regulation Thursday, warning that gaps in national oversight let criminal networks exploit digital assets. The report found that 83% of surveyed jurisdictions have adopted rules under Recommendation 15, which requires licensing and registration of virtual asset service providers (VASPs) and application of anti-money laundering standards. Eleven jurisdictions still have not implemented the framework.
The FATF flagged two specific risks. Offshore VASPs – firms registered in weak regulatory zones that offer services across borders – remain a blind spot for enforcement. The report also cited a case where a Cambodia-based money laundering node issued a stablecoin marketed as immune to asset freezing, a feature common to all regulated centralized stablecoins. The FATF said stablecoin misuse is a growing concern.