Less than 30% of jurisdictions worldwide have implemented cryptocurrency regulations: FATF president

Acting president of the Financial Action Task Force (FATF) T. Raja Kumar, said in an interview with CoinDesk, that less than one third of jurisdictions worldwide have implemented regulations for the cryptocurrency sector. Kumar stressed the need to address this lack of regulation, describing it as a “call to action.” The statistic was revealed in a progress report titled “Status of Implementation of Recommendation 15 by FATF Members and Jurisdictions with Materially Important VASP Activity,” which assesses how jurisdictions have followed the FATF’s recommendations.

It is important to note that while the Financial Action Task Force recommendations are not mandatory, jurisdictions that do not comply may face consequences such as a loss of credibility ratings and inclusion on the FATF’s watchlist. The lack of regulation in the cryptocurrency sector has led to a credibility and safety crisis, with incidents of hacking and allegations of terrorist financing.

Kumar addressed concerns that a lack of regulation “creates significant loopholes for both criminals and terrorists to exploit.” Countries should take the issue seriously and strengthen regulation, as virtual assets tend to flow towards less regulated jurisdictions. The report aims to bring global attention to the matter and inform regulators and the private sector about the FATF’s standards. It emphasizes the international and borderless nature of virtual assets and warns that a failure to regulate VASPs in one jurisdiction can have serious global implications.

Jurisdictions are evaluated for compliance with the FATF recommendations, including criteria such as enacting legislation or regulations, conducting supervisory inspections, and enforcing the travel rule. Some jurisdictions, such as India, Singapore, Spain, Portugal, Italy, and Malaysia, are still in the process of assessment for compliance.

The Financial Action Task Force (FATF) leads global action to tackle money laundering, terrorist and proliferation financing. The 39-member body sets international standards to ensure national authorities can effectively go after illicit funds linked to drugs trafficking, the illicit arms trade, cyber fraud and other serious crime.