The Financial Action Task Force (FATF) said in a report released this week that global efforts to regulate virtual assets and service providers have improved but remain incomplete, with illicit use of stablecoins accelerating sharply in 2025.
The intergovernmental watchdog’s sixth targeted update on the implementation of its standards found that although 73% of jurisdictions surveyed have passed laws enforcing the so-called Travel Rule for crypto transfers, enforcement remains limited.
The report noted that out of the 85 countries with Travel Rule laws, nearly 60% have yet to issue compliance findings or directives.
The report also highlighted a record-breaking $1.46 billion virtual asset theft this year by North Korean actors from the crypto exchange Bybit.
FATF noted the hackers used social engineering and complex laundering networks involving mixers, OTC traders, and more than 125,000 Ethereum wallets. Only 3.8% of stolen funds were recovered, highlighting persistent difficulties in tracing and repatriating crypto-linked proceeds of crime.
Overall, stablecoins have become the dominant vehicle for illicit on-chain activity, driven by their low cost, fast settlement, and broad liquidity.
FATF cited private sector estimates showing over $30 trillion in stablecoin volume during the past year, alongside the growth of ‘pig butchering’ scams and professional scam networks employing AI-generated chatbots and deepfakes to defraud victims.
Despite these risks, the report found that only one jurisdiction is fully compliant with FATF Recommendation 15 on virtual asset oversight. Meanwhile, 29% of countries were rated ‘largely compliant,’ while about half remain only partially compliant and 21% are not compliant at all.
FATF urged jurisdictions to accelerate licensing and registration of virtual asset service providers, strengthen enforcement against unregistered entities, and implement measures to monitor decentralized finance (DeFi) arrangements.
The report also noted that around half of the surveyed regulators require DeFi projects with identifiable control parties to register as VASPs, but enforcement remains rare.
Looking ahead, FATF plans targeted reports on stablecoins, offshore VASPs, and DeFi over the next year. The regulatory body warned that as stablecoins approach mass adoption, uneven global regulation will heighten illicit finance risks and hamper coordinated responses.
The next comprehensive update on Recommendation 15 implementation is due in 2026.
