The Financial Action Task Force (FATF) continues to play a pivotal role in shaping the global regulatory landscape for cryptocurrencies through its AML/CFT-focused standards—particularly Recommendations 15 and 16 (the Travel Rule). As of April 2025, only 40 out of 138 jurisdictions assessed were rated “largely compliant” with these standards—up modestly from 32 in 2024—highlighting persistent regulatory gaps across the world.
FATF’s Key Crypto Regulations
2.1 Recommendation 15 (R.15 & INR.15) – Regulating Virtual Assets & VASPs
Since its 2019 Interpretive Note, FATF’s R.15 has mandated that Virtual Asset Service Providers (VASPs) be licensed, registered, and subject to AML/CFT oversight. The 2025 targeted update, FATF’s sixth, presents modest gains: now 29% of jurisdictions (40 of 138) are largely compliant, up from 25% in 2024, while 21% remain non-compliant, down from 25%.
Yet significant issues remain—especially around licensing/registration, identifying VASPs, and supervising offshore service providers Global Regulation TomorrowFATF.
2.2 Recommendation 16 (Travel Rule) – Ensuring Transaction Traceability
The Travel Rule, under R.16, requires that VASPs track and securely transmit originator and beneficiary details for crypto transfers—a key measure to boost transaction transparency and deter illicit finance SumsubFATF.
As of mid-2025, 99 jurisdictions have enacted or are in the process of enacting Travel Rule laws—covering nearly 98% of global VASP activity FATFLukka. To help bolster compliance, FATF also released “Best Practices on Travel Rule Supervision” FATF.
Why It Matters for Crypto’s Future
- Combatting Illicit Finance & Scams
In 2024, illicit addresses handled an estimated $51 billion in on-chain fraud and scam activity, with stablecoins increasingly used by illicit actors, including North Korea-linked entities and terrorist groups ReutersFATF. - The Ripple Effect of Global Weaknesses
Given crypto’s borderless nature, regulatory failures in even one region can create global vulnerabilities. FATF’s 2025 update strongly emphasized this, urging unified global enforcement ReutersFATF and Future of Crypto. - Emerging Risks: Stablecoins & DeFi
Stablecoins remain a high-risk vector for illicit activity. FATF acknowledges this and is preparing targeted research into stablecoins and decentralized finance (DeFi) for late 2025 into 2026 AInvestFATF.
Global Implementation Snapshot
- Materially Important Jurisdictions
FATF’s 2025 report expanded its list of “materially important jurisdictions” by adding nine non-FATF members, extending coverage to ~98% of global VASP activity NotabeneTRM Labs. - Licensing & Travel Rule Lagging
While more jurisdictions are enacting legislation, many lag in actual enforcement of licensing, supervision, and Travel Rule adherence Global Regulation TomorrowFATF.
Implications for Stakeholders
5.1 VASPs & Crypto Industry
- Must ensure robust compliance frameworks—covering KYC, Travel Rule implementation, and registering under licensed jurisdictional frameworks and Future of Crypto.
- Regional trends show positive movement: as of Q1 2025, 72% of VASPs globally are KYC compliant, rising from 64% in 2024; 85% of North American centralized exchanges fully meet Travel Rule guidelines CoinLaw.
5.2 Regulators & Policymakers
- Need to fill enforcement gaps—particularly in supervising offshore VASPs and identifying VASP operators.
- FATF’s new Travel Rule supervision guide is available to support stronger, more unified regulation FATFTRM Labs.
5.3 Crypto Users & Investors
- Anticipate improved transaction transparency and stronger trust—but potentially slightly slower transfer processes under stronger compliance frameworks.
What’s Ahead
- Stablecoins & DeFi Focus
FATF is set to unveil more guidance and rulemaking efforts targeting stablecoins and DeFi by mid-2026 AInvestNotabene and Future of Crypto. - Next Global Update
The follow-up to the 2025 report is scheduled for 2026, which will shed light on further implementation and progress Global Regulation Tomorrow. - Tax Transparency Synergy
While FATF focuses on AML/CFT, the OECD’s Crypto-Asset Reporting Framework (CARF) is gaining traction, compelling Crypto-Asset Service Providers (CASPs) to collect and report user tax data—complementing FATF compliance efforts.
Conclusion
FATF’s evolving standards, especially Recommendations 15 and 16, are shaping the regulatory foundation for the future of crypto. While strides have been made—particularly in expanding Travel Rule legislation and formal compliance coverage—weak enforcement and global inconsistencies remain.
Moving forward, the crypto industry’s future will depend on coordinated global implementation, improved supervision, and proactive regulation—especially around stablecoins and emerging decentralized avenues. Effective compliance will not only deter illicit activity, but also support the maturation, trustworthiness, and broader integration of cryptocurrency in the global financial ecosystem.